Micron's Rally Fizzles — Options Traders Split on Future Moves
By John Nada·Jun 29, 2026·4 min read
Micron's post-earnings rally evaporates, options traders divided. Broader semiconductor sector sees gains despite risk-hedging trends.
Shares of Micron Technology experienced a significant reversal in fortune, as their robust post-earnings rally dissipated, leading to an 18% drop from the 52-week high reached just days earlier. On Monday, Micron's stock traded as low as $1,023.65, marking a steep decline of nearly $25 from its closing price before the company's fiscal third-quarter earnings report, which had exceeded analyst expectations.
This sharp decline came as a surprise to many in the market, spurring a mix of reactions among options traders. According to CNBC Business, the trading activity in Micron showed a nuanced picture. Call volume outpaced puts, with $1.6 billion in call options traded by midday Monday. However, data from ThinkOrSwim indicated that more calls were sold than bought, suggesting a complex sentiment among traders. Some viewed the stock's downturn as an opportunity to buy the dip, betting on a potential rebound.
In contrast, the broader semiconductor sector displayed a slightly different narrative. The VanEck Semiconductor ETF (SMH) rose by about 3% on Monday, even as Micron's stock dipped. This rise was largely driven by significant gains in companies like Seagate Technology and Western Digital. These stocks saw increases of 8% and 10%, respectively, following a bullish initiation by Melius Research, which projected a potential 60% rally from current prices. The optimism for these companies was reflected in the call volume, which was nearly double that of puts, though the total options traded were under 40,000.
Western Digital, in particular, saw about 27,000 contracts traded, with 3,000 calls purchased compared to just 1,000 puts. The most popular contract by volume was the 700-strike call, expiring on Thursday, priced at $8.50, which would require a 10% rally to become profitable.
Despite the positive movements in some individual stocks, the overall sentiment in the semiconductor sector remained cautious, as indicated by the trading patterns in the SMH ETF. The ETF experienced a notable bearish skew, with put volume more than tripling call volume. This bearish trend has been a recurring theme throughout the summer. On Monday, traders purchased almost 11,000 puts compared to just 3,500 calls, signaling persistent caution in the market.
Volatility in the SMH ETF stood at around 60, making it a potentially preferable vehicle for hedging compared to single stocks, where implied volatility remains among the highest in the market. The most popular contract in SMH was the 560-strike put, set to expire on August 21.
Meanwhile, the Roundhill Memory ETF (DRAM) showed a more optimistic outlook. Nearly 300,000 contracts were traded, with more than twice as many calls bought compared to puts. However, even here, there were signs of waning enthusiasm, as more calls were sold than bought. A notable trade involved a bullish investor collecting over $3 million by selling 2,200 of the 80-strike puts expiring on December 18 for $5.2 million and buying nearly 3,000 of the 40-strike puts expiring in June 2027 for $2 million.
This divergence in trading strategies across various stocks and ETFs underscores the complexity of the current market environment. For Micron Technology, the recent pullback after an impressive rise starkly contrasts with the broader sector's cautious optimism. The bearish sentiment prevailing in the SMH ETF reflects underlying caution among traders, as they navigate the volatile landscape of the semiconductor industry.
The activity within the options market suggests that investors are carefully weighing their strategies, balancing potential opportunities against the risks inherent in a sector characterized by rapid technological advancements and market fluctuations. As traders assess the dynamics at play, understanding where the stronger momentum lies becomes crucial.
Micron's recent performance, along with the movement in other semiconductor stocks, highlights the importance of close analysis and the need for strategic positioning in a sector known for its volatility. The mixed signals from options trading activity reveal a market where confidence is tempered by caution, and traders are split on the future direction of key players like Micron in the semiconductor space.