Two Under-the-Radar Tech Stocks: How to Play Them with Options

In the rapidly evolving tech landscape, some stocks fly under the radar despite their significant potential. Two such companies are Micron Technology (MU) and Roku (ROKU), which have unique opportunities and challenges. By leveraging options strategies, investors can capitalize on these tech stocks while managing risks effectively.

Micron Technology (MU) is a leading provider of memory and storage solutions, with a strong presence in the AI and data center markets. The company's memory chips are crucial components in AI accelerators and modern smartphones, but its stock price has been volatile due to the cyclical nature of the semiconductor industry and external factors such as inflation and the global chip shortage. However, as the AI boom continues and the global chip shortage eases, Micron's stock is poised for a rebound.

Roku (ROKU) is a dominant player in the media-streaming market, with a strong user base and a growing international presence. The company's streaming platform and hardware devices have gained popularity, but its lack of profitability and limited international expansion have kept its stock price relatively low. As Roku continues to innovate and expand its global reach, its user base and revenue are expected to grow, driving its stock price higher.

Options strategies can help investors mitigate risks and leverage potential gains in these tech stocks. Here are some options strategies to consider:

1. Protective Puts: Buying protective puts can help limit downside risk if the stock price falls due to cyclical downturns, geopolitical tensions, or increased competition. This strategy involves purchasing put options with a strike price below the current stock price, providing the right, but not the obligation, to sell the stock at that price.
2. Straddles: Buying straddles involves purchasing both a call and a put option with the same strike price and expiration date. This strategy can help profit from significant price movements in either direction, mitigating the risk of rapid technological changes and competition.
3. Collar Strategies: Implementing a collar strategy involves buying a protective put and selling a covered call with the same expiration date. This strategy can help limit downside risk while generating additional income.
4. Risk Reversals: Selling out-of-the-money puts and buying out-of-the-money calls with the same expiration date can help generate income while protecting against significant price declines.

In conclusion, Micron Technology (MU) and Roku (ROKU) are two under-the-radar tech stocks with significant potential. By leveraging options strategies, investors can manage risks and capitalize on the growth opportunities presented by these companies. However, it's essential to understand the risks and costs associated with options strategies and to manage them appropriately.