Today’s tickers: MU, REE, MEE, DAL, USB, VLTR & KR
MU – Micron Technology, Inc. – Renewed rumors that the memory chip maker could be the target of a leveraged buyout by private equity investors looking to take the company private inspired an options feeding frenzy today. Micron’s shares responded to speculative musings by rising as much as 6.30% to an intraday high of $7.76. Just before 2:00 p.m. in New York trading, one big options market participant initiated a large-volume bullish spread in the April 2011 contract. The debit call spread serves to position the trader to benefit handsomely should buyout rumors wind up having some truth to them ahead of April expiration. The options strategist picked up 21,750 calls at the April 2011 $9.0 strike for a premium of $0.71 each, and sold the same number of calls at the higher April 2011 $11 strike at a premium of $0.27 a-pop. Net premium paid for the transaction amounts to $0.44 per contract. Thus, the investor is prepared to make money should Micron’s shares surge 21.65% over today’s high of $7.76 to exceed the effective breakeven point on the spread at $9.44 by expiration day next year. The trader may pocket maximum potential profits of $1.56 per contract if the chip maker’s shares jump 41.75% to trade above $11.00 by April expiration. Investors populating Micron options during the session exchanged more than 7.1 calls on the stock for each single put in play as of 3:25 p.m. in New York. A total of 146,615 option contracts have changed hands on Micron Technology with 35 minutes to go before the closing bell.
REE – Rare Element Resources Ltd. – Shares in Rare Element Resources Ltd., which has a 100% interest in the Bear Lodge property, rallied more than 19.2% today to secure a new 52-week high of $13.71. The Bear Lodge property contains one of the largest disseminated rare-earth deposits in North America and extensive gold occurrences, according to REE’s website. The sharp move in shares today attracted a number of options traders. Investors have exchanged 13,869 option contracts on the stock as of 3:30 p.m. in New York, which is a shade above the total level of existing open interest on REE of 13,690 contracts. REE’s shares have increased a staggering 391.4% since touching down at an intraday low of $2.79 back on August 19, 2010. The firm’s shares are up 649.1% since June 30,…
