Micron Plunges 3.73% Intraday, Unveiling the Shadow Behind the Sell-Off?

Summary
• Micron’s Q3 earnings beat estimates with $1.91 EPS on $9.3B revenue
• Goldman Sachs warns of memory chip oversupply, triggering sector-wide selloff
• Mizuho highlights Micron’s AI memory edge with HBM4 pricing power

Micron Technology (MU) has plunged 3.73% intraday, trading at $109.01 as of 4:30 PM ET, after a sharp selloff driven by sector-wide concerns over memory chip oversupply. The stock opened at $113.0 and has since traded between $108.309 and $113.0, with heavy volume of 14.87 million shares. Analysts are debating whether the sell-off reflects short-term profit-taking or a broader market reassessment of AI-driven memory demand.

Sector-Wide Concerns Spur Micron's Sharp Decline
The selloff in Micron shares was triggered by a Goldman Sachs report warning of potential pricing pressure in the memory chip market, particularly for SK Hynix. While Micron was not explicitly named, the report’s implications for sector-wide margin compression sparked a broad sell-off. The market is now factoring in fears of oversupply as SK Hynix and Samsung ramp up HBM production, which could dilute pricing power. However, this move contrasts with Micron’s recent earnings beat, where the company reported $4.61 billion in operating cash flow and raised its Q4 revenue guidance to $10.7 billion. Analysts like Mizuho argue that Micron’s upcoming HBM4 chips and AI-driven DRAM demand position it to outperform peers, but short-term volatility persists.

Semiconductor Sector Reacts to Oversupply Fears, Intel Gains Ground
The semiconductor sector is mixed as memory chip oversupply concerns weigh on Micron, but Intel (INTC) leads the sector with a 0.56% intraday gain. Intel’s recent focus on AI-driven manufacturing and disciplined R&D spending has bolstered its position. Meanwhile, TSMC’s expansion in Japan and GlobalFoundries’ Singapore fab highlight the sector’s long-term growth potential. Micron’s selloff reflects immediate pricing pressures, but the broader semiconductor industry remains optimistic about AI and HPC demand, with Morgan Stanley naming Micron as a top pick in the memory subsector.

Options and ETF Strategies Amid Volatility
• MACD: 1.03 (bearish divergence from signal line at 3.16)
• RSI: 34.18 (oversold territory)
• Bollinger Bands: Lower band at $112.68 (price near support)
• 30D MA: $119.78 (price below)
• 200D MA: $98.70 (price above)

Micron’s technicals suggest a short-term bearish bias, with the RSI indicating oversold conditions and the MACD histogram turning negative. The stock is trading near the lower Bollinger Band, suggesting a potential bounce. For options, MU20250801P104 (put option) and MU20250801P105 (put option) stand out due to high leverage ratios (76.53%, 58.74%) and implied volatility (44.50%, 46.24%).

MU20250801P104:
• Code: MU20250801P104
• Type: Put
• Strike Price: $104
• Expiration: 2025-08-01
• IV: 44.50% (moderate)
• Leverage: 76.53% (high)
• Delta: -0.2667 (moderate sensitivity)
• Theta: -0.01498 (slow decay)
• Gamma: 0.03914 (high sensitivity to price movement)
• Turnover: $411,577 (high liquidity)
This put option offers strong leverage and gamma, ideal for capitalizing on a 5% downside to $103.56 (payoff: $104 - $103.56 = $0.44 per share).

MU20250801P105:
• Code: MU20250801P105
• Type: Put
• Strike Price: $105
• Expiration: 2025-08-01
• IV: 46.24% (moderate)
• Leverage: 58.74% (high)
• Delta: -0.3145 (moderate sensitivity)
• Theta: -0.00985 (slow decay)
• Gamma: 0.04069 (high sensitivity to price movement)
• Turnover: $73,924 (high liquidity)
This option provides a balance of leverage and volatility, with a projected payoff of $105 - $103.56 = $1.44 per share under a 5% downside scenario. Aggressive bears may consider MU20250801P104 for short-side exposure as the stock tests the $108.309 intraday low.

Backtest Micron Technology Stock Performance
The backtest of MU's performance after a -4% intraday plunge shows favorable short-to-medium-term gains. The 3-day win rate is 52.45%, the 10-day win rate is 55.77%, and the 30-day win rate is 65.24%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 9.30%, which occurred on day 59, suggesting that MU can recover significantly from such events.

Positioning for a Volatile Semiconductor Sector
Micron’s sharp intraday decline reflects a mix of sector-wide fears and its own strong fundamentals. While the stock’s technicals point to oversold conditions and potential near-term support at $108.309, the broader semiconductor sector remains optimistic about AI-driven demand. Intel’s 0.56% gain highlights the sector’s resilience, but investors should monitor Micron’s ability to defend its HBM4 pricing power. For now, key levels to watch include the 30D MA at $119.78 and the 200D MA at $98.70. Aggressive options plays like MU20250801P104 offer high leverage for downside scenarios, but long-term bulls should focus on Micron’s Q4 revenue guidance and AI memory roadmap. Watch for $108.309 support or a rebound above $113.0 to signal a shift in sentiment.