To The Moon

On February 26, the U.S. stock market as a whole showed an adjustment trend dominated by the technology sector, and the three major indexes were clearly differentiated. The S&P 500 Index and the Nasdaq Composite Index closed down, with the Nasdaq falling relatively more significantly, and technology heavyweights becoming the main drag; The Dow Jones Industrial Average fluctuated slightly, indicating a certain degree of rotation of funds between sectors. In terms of disk structure, high-valuation growth stocks are under pressure, while some traditional industries and defensive sectors perform relatively stably.

Semiconductor and AI-related sectors became the core of the day's adjustment. Although NVIDIA's previously released performance data is still strong, the market began to reassess the high growth expectations implied by its stock price, and the stock price fell significantly that day, driving the Philadelphia Semiconductor Index to weaken as a whole. The market reaction shows that even if the fundamentals maintain a high degree of prosperity, when the valuation is already at a high level, funds have stricter requirements for future capital expenditure intensity and profitability sustainability. The previously accumulated gains in the technology sector make it easy for slight fluctuations in sentiment to trigger profit-taking.

The memory chip sector was also dragged down.$Micron Technology (MU) $It fell by about 3% on the day, and the trend was consistent with the overall direction of the semiconductor sector. As an important representative of the storage cycle, the company's stock price has previously benefited from the demand for AI data centers and the expectation of improvement in industry supply and demand and continued to rise. However, under the background of pressure on the overall valuation of the technology sector, funds have chosen to realize the gains in stages. At present, the market is more concerned about the continuity of storage prices and inventory cycles in the next few quarters, rather than the improvement data in a single quarter.

Overall, the market performance on February 26 was more like a round of structural valuation digestion than systemic risks driven by sudden changes in fundamentals. Differentiation has begun to appear within the technology sector, and funds tend to sub-sectors with higher profitability certainty or relatively reasonable valuations. For storage and AI-related targets, short-term volatility may intensify, but the medium-term trend still depends on whether the industry prosperity can continue to be realized and the capital market's repricing of the balance between growth and valuation.

MU Bull Put Credit Spread Strategy

1. Strategy structure

Investors in$Micron Technology (MU) $Build a Bull Put Spread strategy on options.

This strategy is a long/volatile strategy that collects premium, limited returns, and limited risks. It is suitable for judging that MU can hold the lower support area, maintain sideways or rise moderately before expiration.

1 ️ ⃣ Sell higher strike price Put (main source of income)

• Sell 1 Put with strike price K ₂ = $395

• Premium received = $8.92/share

This Put is closer to the current price and is a major source of revenue for Strategic premium. As long as the expiration price is ≥ $395, the option expires and the investor retains all premium rights.

2 ️ ⃣ Buy lower strike price Put (control downside risk)

• Buy 1 Put with strike price K ₁ = $390

• Premium paid = $7.55/share

This Put is used to limit the risk when MU falls sharply and avoid the loss caused by naked selling Put.

3 ️ ⃣ Put-side net income (per share)

Net premium revenue was:

8.92 − 7.55 = $1.37/share

This is the maximum available benefit of this strategy.

2. Maximum profit

When the MU expiration price is ≥ $395:

• Both Put are out-of-the-money

• All options lapsed

Investors retain all net premium:

• Maximum profit (per share) = $1.37

• Per contract (100 shares) = $137

Conditions of occurrence: Expiration price ≥ $395

3. Maximum loss

When the MU expiration price is ≤ $390:

• Both Put are in-the-money

• Strike spreads are fully locked

Calculation:

Strike spread = 395 − 390 = $5

Maximum loss (per share) = Strike spread − Net premium

= 5 − 1. 37 = $3.63/share

• Maximum loss per contract = $363

Conditions of occurrence: Expiration price ≤ $390

4. Break-even point

Formula:

Sell Put Strike Price − Net premium

= 395 − 1. 37 = $393.63

Maturity judgment:

• Price ≥ 393. 63 → Earnings

• Price = 393.63 → No profit, no loss

• Price ≤ 393. 63 → Loss

  

5. Strategic characteristics and applicable situations

Strategy Characteristics

• Clear bullish/shock strategy

• Charge premium structure, time value benefits investors

• Maximum gain and maximum loss are determined when opening a position

• Compared with naked selling Put, the downside risk is capped

Applicable situations

When investors judge:

• MU has strong support in the 390-395 range

• There is little probability of falling below 390 in the short term

• I hope to obtain relatively stable income by selling time value

• Or establish a closing premium strategy when the implied volatility is high

The essence of this structure is:

"Use the risk of $3.63 to gain a profit of $1.37",

The winning rate depends on whether MU can hold above 395 or at least not fall below 393.63. Once it effectively falls below 390, the downside loss will be locked at the upper limit, but it will not expand indefinitely.