MU short put play - 93.5k premium for obligation to buy MU at $500
u/willbabu ·
Reddit — r/wallstreetbets
· May 21, 2026 at 00:59
· ⬆ 31 pts
· 💬 53 comments
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Positions:
10 MU 6/27 $500 csp
1300 MU shares
Entered after MU pulled back around $100 from recent ATH. Net basis if assigned is 406.45, approx 44% below spot. Premium is around 19% of strike for 13 months of duration, which is where I want to be on the MU IV curve right now. $500K max loss (if MU goes to 0) against $93.5K credit, net -407k if MU goes to 0. If MU holds above $500 at expiration the trade returns around 23% on net basis; if it doesn’t, I own MU at a level i take voluntarily anyway.
The near-term setup is if MU grinds back toward ATH in the weeks heading into June earnings, I capture 30-50% of premium in a few weeks rather than 13 months. At 50% capture that’s around $45K closed out early, with the optionality to re-enter on the next pullback.
My thesis combines two legs 1) asymmetric near-term upside into earnings, and 2) my willingness to be long MU as a synthetic entry if it goes the other way. $500 strike isn’t a price target nor do I think it will hit $500, rather 500 is the level below which I’d rather be long. A 32% drawdown in 13 months on a name with this earnings trajectory requires a real macro break like recession, demand collapse, or a geopolitical shock that drags the whole semi tape. If that happens, I’m adding anyway, but I still have optionally to roll down and out to extend the puts while collecting additional premiums. However the asymmetry is that the upside scenario plays out in weeks and I close early whereas the downside scenario plays out over a year and I own shares at a price I want, or I keep rolling and collecting additional premiums while reducing the strike price. Either way, 93.5k is mine to collect money market interest or deploy elsewhere.