MU Plummets 4.6% Amid Contradictory Signals—What’s Driving the Volatility?

• Micron (MU) plunges to $118.78, down 4.6% intraday after hitting a low of $117.02
• Mizuho raises price target to $150 while Edgewater warns of 'sub-seasonal' H2 demand risks
• Billionaire Kerr Neilson adds $81M to his Micron stake, now 4.72% of his portfolio
• Options data reveals $438K in bearish puts and $469K in bullish calls over 30 days

Micron’s sharp decline creates a crossroads for investors: is this a buying opportunity fueled by AI chip optimism or a warning sign of looming sector-wide softness? The stock’s 52-week range of $61.54–$129.85 underscores its volatility, with today’s move erasing $6.75 from its previous close.

Bearish Demand Warnings Overshadow Strong Earnings
Micron’s plunge stems from Edgewater Research’s stark warning that memory chip demand and pricing will weaken in H2 2025, with a 'bias lower.' This contrasts sharply with Mizuho’s upbeat $150 price target and Micron’s Q3 results, which beat estimates on $9.3B revenue and $1.91 EPS. Analysts highlight weak free cash flow ($1.9B over 12 months) and the risk of deteriorating margins if Edgewater’s projections hold. The stock’s 46.76% YTD gain had made it vulnerable to profit-taking, especially as traders assess whether AI-driven HBM demand can offset broader sector softness.

Leverage Bearish Puts or Bullish Calls Amid Technical Crossroads
Technical Indicators:
• 200-day MA: $98.24 (well below current price)
• RSI: 51.72 (neutral)
• Bollinger Bands: $116.08–$128.69 (price near lower band)
• MACD: Negative histogram (-1.12) suggests short-term bearish momentum

Trading Setup: MU trades below its 30-day moving average ($116.62) but holds above critical support at $116.08. Bulls target $122.56 resistance (30-day high), while bears aim for $110. Aggressive traders should watch $117.02—the day’s low—for a potential breakdown.

Top Options Picks:
1. MU20250718P112 (Put Option):
• Strike: $112 | Expiration: July 18
• Implied Volatility: 41.14% | Leverage: 424.61%
• Delta: -0.10 | Theta: -0.001 | Gamma: 0.031
• Why Buy: High leverage with minimal time decay offers asymmetric risk-reward for a potential drop to $110.

2. MU20250718C118 (Call Option):
• Strike: $118 | Expiration: July 18
• Implied Volatility: 36.66% | Leverage: 46.81%
• Delta: 0.58 | Theta: -0.74 | Gamma: 0.077
• Why Buy: Near-the-money call with decent gamma exposure for a rebound toward $120–$122 resistance.

Action Alert: Short-siders should stack puts at $112 while bulls test $118 calls. Avoid over-leveraged ETFs like MUU (Direxion Daily MU Bull 2X) (-9.1% drop today) until volatility eases.

Backtest Micron Technology Stock Performance
The backtest of MU's performance after a -5% intraday plunge shows a significant positive return. The strategy achieved a 291.74% excess return and a 24.05% CAGR, with a maximum drawdown of 0.00%, indicating it effectively managed risk while capturing significant gains.

MU’s Crossroads: Bullish Tech or Bearish Reality—Watch This Key Level
Micron’s fate hinges on whether AI-driven HBM demand can offset Edgewater’s H2 warnings. Technicals show support at $116.08 but resistance near $122.56 remains formidable. With Intel (INTC) down 0.7% and sector leader NVIDIA (NVDA) unmentioned in today’s data, MU investors must weigh near-term liquidity risks against long-term AI exposure. Final Take: Hold firm below $117 triggers a deeper correction; a close above $120 renews bullish momentum. Watch for Q4 earnings guidance and HBM supply chain updates to confirm the trend.