Semiconductor stocks were hit in the second half of August on concerns about how a potential recession will impact demand from the automotive and industrial end markets in addition to consumer electronics. I believe these fears are overblown. The world will always need more chips, and Micron Technology (MU) and other chip companies are significantly undervalued at current levels.
I am recommending we roll our call out two weeks to generate more income and reduce our cost basis on the position. We will leave the strike price the same to take advantage of a potential bounce back in shares following the holiday weekend.
Current Stock Price: $55.90
Cost Basis: $66.33/$69.78
- Buy to close the MU Sep Week One (9/2) 60 Call for around $0.07
- Sell to open the MU Sep Monthly (9/16) 60 Call for around $0.71
- Set initial credit limit at $0.64, but adjust as needed to roll today
New Cost Basis: $65.69/$69.14