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The wheel on Micron (MU): a cycle stock with a big price tag

Micron sells memory chips, and memory runs in booms and busts. That makes its premiums rich and its drops deep. Before any premium, work out what 100 shares costs today and what a bust would do to them.

Options guide · 8-minute read · Updated 2026-10-28

What Micron is like for the wheel

Micron (MU) makes memory chips: the DRAM that computers think with and the flash storage that holds their files. Data centres, PCs and phones all need it. That is the whole business, and it is why the stock moves the way it does.

For the wheel strategy, that gives you:

• A cycle stock, not a steady grower. Memory is close to a commodity. When chips are scarce, prices jump and Micron's profits soar. When factories catch up, prices fall and profits can vanish.
• Implied volatility above most big tech names. The market expects large moves, so the premiums look rich.
• Earnings off the usual calendar. Micron's fiscal year doesn't follow the calendar year, so its reports don't land in the same weeks as most tech results. Check the date on its investor-relations page before every trade.
• Busy options. Spreads are usually tight near the price, with weekly expiries and deep Open interest. Check the chain on the day.
• A small dividend next to the share price. Don't count on it to cushion a drop.

This isn't a recommendation to buy or sell Micron.

Why the memory cycle matters more than the chart

Most chip stocks move on demand. Micron moves on demand and on price. When buyers stock up on memory, prices rise fast. When they have too much, they stop ordering, and prices fall fast too.

That cycle has a cruel timing problem for put sellers. The stock tends to look strongest, with the loudest headlines, close to the top of a boom. That is also when the premiums feel most worth selling. A put sold there is a promise to buy near the peak.

So ask one question before the premium: if memory prices turned down next quarter, would you still want 100 shares at this strike? If the answer depends on the boom lasting, the strike is too high.

What a big run does to the cash per contract

One contract covers 100 shares. When a stock climbs, the cash for one cash-secured put climbs with it.

A big run can move a stock from one row of that table to the next. So don't use last year's number. Take today's price, multiply by 100, and that is your starting point. Our cash needed to wheel popular stocks page puts the same sum next to other names.

If that number is a big slice of your account, the contract is too big, whatever the premium says. You can't sell a part of a put.

Account note: covered calls are widely allowed in a TFSA or RRSP, while cash-secured puts depend on the broker. Options permissions also differ by broker in the US and Canada, so check yours first.

A worked example (an illustration, not a trade idea)

The numbers are for a made-up memory stock, XYZ. They are not Micron's prices.

XYZ trades at $400 after a long run. You sell a 30-day $360 put for $12.00. You collect $1,200. Your broker sets aside $36,000. There is no earnings report inside the trade.

Your break-even is $348: the $360 strike minus the $12 premium.

Look at the bottom two rows. A memory bust doesn't stop at the strike. The most you can collect is $1,200. The most you can lose, if it went to zero, is $34,800.

If you're assigned

You now own 100 shares at $360, with a cost of $348 after the premium. The second half of the wheel is selling a covered call on them.

On a cycle stock, this is where people get hurt twice. If XYZ falls to $280, a call at your $360 cost pays very little. A call down at $300 pays more, but if memory prices recover and XYZ jumps, your shares get sold at $300. You lock in the loss right before the rebound.

Decide before you sell the first put which one you'll do:

• Sell calls only at or above your cost, and accept small premiums while you wait.
• Sell the shares at a price on the chart you chose in advance, such as the last place price turned around.

Either can be right. Choosing in the middle of a drop is what goes wrong.

Before you wheel it

1. Check the earnings date. If it falls inside your expiry, you are selling the earnings gap. After the report, the premium often shrinks fast; see IV crush explained.
2. Ask where the cycle is. Read the latest report's comments on memory prices and inventory in plain terms: are customers still buying, or full?
3. Size it as a share purchase. Strike × 100 should fit your rule for one stock. Many people cap one name at a small part of the account.
4. Pick the strike as a price you'd pay with no option attached. If you wouldn't buy 100 shares there today, don't sell the put there.
5. Write the plan for a bust. Hold and sell calls at cost, or sell the shares at a set price?

For the wider pattern on rich-premium names, see wheeling high-IV momentum stocks. For another chip name with a different business, see the wheel on AMD.

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