Key Numbers
- $93.5K — Credit received for selling 10 MU 6/27 $500 puts (Reddit r/wallstreetbets)
- 44% — Discount to spot if assigned at $500 strike (Reddit r/wallstreetbets)
- $500K — Maximum loss if Micron collapses to zero (Reddit r/wallstreetbets)
- 19% — Premium as a percentage of the $500 strike, annualized over 13 months (Reddit r/wallstreetbets)
Bottom Line
The trader collected a sizable credit while limiting upside risk to a 44% discount entry point. Investors can replicate the structure to gain exposure to Micron at a steep markdown, but must accept a $500 K worst‑case loss.
The Reddit user sold ten June 27 $500 Micron (MU) put contracts for a $93.5 K credit. The trade gives you a 44% below‑spot entry price if MU stays above $500 at expiration, while capping the worst‑case loss at $500 K.
Why This Matters to You
If you own or plan to buy Micron, this put credit can fund a discounted position without additional cash. The structure also protects a large portfolio from a total collapse, as the maximum loss is fixed.
Sell Puts to Lock a Discounted Entry
Putting a short put on a volatile chip stock is counter‑intuitive because most traders avoid downside exposure on high‑beta names. The Reddit trader instead targeted Micron after it pulled back roughly $100 from its recent all‑time high, creating a $500 strike well below current levels.
This approach captures premium while forcing the market to buy the shares at a pre‑determined price, effectively setting a limit order at $500 (Analyst view — Reddit user). The $93.5 K credit represents 19% of the strike, translating to an annualized return of roughly 13% on the notional if the stock never falls below $500.
Risk Profile Mirrors a Cash‑Secured Put
The trade’s risk mirrors a cash‑secured put: the seller must purchase 1,300 shares (10 contracts × 100 shares) at $500 if assigned. That creates a $500 K obligation, but the credit reduces the net cost to $406.45 per share, a 44% discount to the spot price at the time of writing (April 30 2026) (Confirmed — Reddit post).
If Micron falls to zero, the loss equals $500 K minus the $93.5 K credit, leaving a net loss of $406.5 K. The trade therefore caps downside at a known figure while offering upside upside via the premium.
Strategic Timing on the IV Curve
The trader chose a 13‑month horizon to sit on the implied volatility (IV) curve where premiums are richest. Micron’s IV has been elevated after a recent pullback, inflating option prices and making the put credit more attractive (Analyst view — Reddit user).
Holding the position through the June 27 expiration aligns with the next earnings window, providing a natural catalyst that could push the stock back above $500, letting the trader keep the full credit.
What to Watch
- Micron (MU) price action around the June 27 expiration — a break above $500 could lock in the full $93.5 K credit (this week)
- Micron earnings release on July 22 2026 — a beat could drive the stock well above the strike, confirming the trade’s bullish bias (next month)
- Sector IV trends for memory chips (Q3 2026) — a drop in implied volatility would erode future put‑selling opportunities (Q3 2026)
| Bull Case | Bear Case |
|---|---|
| Micron rebounds above $500 before expiration, letting the seller keep the full credit and enter at a 44% discount. | Micron slides below $500, forcing assignment at a loss that exceeds the premium collected. |
Will you use short puts to acquire high‑beta stocks at a discount, or avoid the downside risk altogether?
Key Terms
- Put — An option contract giving the buyer the right, but not the obligation, to sell a stock at a predetermined price.
- Premium — The cash received for selling an option; it offsets the potential loss if the option is exercised.
- Implied volatility (IV) curve — A chart showing how option prices change with different expirations, reflecting market expectations of future price swings.
