Micron Technology Inc_ logo on building-by vzphotos vis iStock Analysts keep hiking their revenue forecasts for Micron Technology, Inc. (MU), as well as their price targets (PTs). I previously discussed shorting out-of-the-money puts, which has been successful. However, as this requires a lot of capital, for investors with limited capital to invest in MU, say…
Micron Technology Inc_ logo on building-by vzphotos vis iStock
Analysts keep hiking their revenue forecasts for Micron Technology, Inc. (MU), as well as their price targets (PTs). I previously discussed shorting out-of-the-money puts, which has been successful.
However, as this requires a lot of capital, for investors with limited capital to invest in MU, say $10,000, one attractive play is out-of-the-money bull credit spreads. This article will describe how to play MU as it rises this way.
More News from Barchart
MU closed at $1,106.59 on Friday, Sept. 4, up 6.10%. The chart below from Barchart shows that it may be breaking out of a recent slump. However, it’s still below the June 25 peak of $1,211.
MU stock – last 3 months – Barchart – Sept. 4, 2026
Higher MU Price Targets (PTs)
I discussed its higher price targets (PTs) in my last 2 Barchart articles: “Micron Technology Puts Have High Yields for Short Sellers Even With MU Stock Higher”(Aug. 21), and “Analysts Keep Hiking Micron’s Revenue and Price Forecasts – Shorting MU Puts Works Here” (Aug. 14).
I showed that MU stock could be worth $1,909.16 (PT) using analysts’ revenue forecasts ($239.84b for FY Aug. 2027), a 45% adj. FCF margin, and a 5.0% FCF yield metric. Yahoo! Finance had a $1,501.98 PT.
(Last quarter it made a 44.1% adj. FCF margin, as I showed in my June 26 Barchart article after the company’s June 24 FY Q3 release for the quarter ending May 28).
Since then, analysts have hiked their revenue forecast to $241.08 billion. So, using the same model, MU stock could be worth 89% more, or $1,921.35 per share (PT). Here’s why:
$241.08b x 0.45 FCF margin = $108.5 billion adj. FCF
Similarly, Yahoo! Finance has raised its analyst survey PT average to $1,513.11 from $1,501.98. Similarly, Barchart’s PT is now $1,474.42.
The bottom line is that MU stock is worth between 45% and 89% more, based on analysts’ and my price targets.
Attractive Short Put Yields in MU
This makes it ideal for short put strategies, as I described in my last Barchart article on Aug. 21. I suggested shorting the $900.00 and $880.00 put strike price contracts for $46.90 and $40.00, respectively, for the period ending Sept. 25.
That gave the investors a potential one-month yield of 5.21% ($46.98/$900.00) and 4.545% ($40/$880.00), respectively.
Now, these premiums have fallen to $13.35 and $9.95, respectively. So, this trade has been successful, and some investors may want to roll this over.
The problem is, this requires a lot of capital. Most people can’t afford it.
For example, shorting the $950 put expiring Oct. 9, one month from now, to collect a midpoint premium of $48.80, or shorting the $930 put for a $40.83 premium, requires $95,000 and $93,000 in collateral (i.e., $950 x 100 = $95k for a cash-secured put play).
Short put and bull put credit spread in MU – Oct 9, 2026 expiration – Sept. 4, 2026 close
The short-put yields are 5.1368% ($48.80/$950.00) and 4.39% ($40.83/$930.00), respectively – very attractive.
However, most investors can’t risk this much capital in one trade. One way around this is to do a bull put credit spread. It requires much less capital and has more attractive expected returns.
Bull Put Credit Spreads in MU
To do this play with, say, $10,000, an investor enters two trades:
1. Short the $950.00 put for a $48.80 credit
2. Buy the $930.00 put for a -$40.83 debit (cost)
This spread play will provide the account with an immediate net credit of almost $8.00 (i.e., $48.80-$40.83 = $7.97), if executed at the midpoints. That is $797 since each contract is for 100 shares.
However, the collateral required by the brokerage firm will be much lower: $95,000 (short) – $93,000 (long)= $2,000 cash collateral.
As a result, the investor makes a huge expected return: $797/$2,000 = 39.85%
Moreover, with $10,000 to play with, the investor could do 5 of these spread trades:
($797 x 5) / (5 x $2,000) = $3,985 / $10,000 = 39.85%
That $3,985 in collected net spread income is close the $4,083 the investor would have collected by shorting the $930.00 in a cash-secured put play.
Downside Risks
This higher return comes with a much higher risk profile. The breakeven point is $950-$7.97, or $942.03. That is 7.33% below Friday’s close of $1,016.59.
It assumes that the investor expects MU to rise from here. However, if MU drops below $942.03, the investor begins to lose capital. At $930, the investor would lose all $2,000 in collateral per trade (or $10,000 for 5 trades).
That is much riskier than a cash-secured short-put play. The only risk here is that the investor’s account will be assigned to buy 100 shares with the collateral. The worst that happens is an unrealized loss, not a complete loss of collateral as with the bull put credit spread.
So, investors need to manage this play carefully and be prepared to close it or roll it over to a new period or lower spread if MU approaches the breakeven, especially close to the expiry period.
The bottom line, though, is that this is one way an investor can play the upside in MU stock on a leveraged basis without risking as much capital as in a short-put play.
On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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