Micron Technology Short-Put Plays Have Huge Yields

Shorting cash-secured put options on Micron Technology (MU) can yield huge returns. A 2-month away MU put option yields 9.6% for a strike price 9% lower. And a one-month expiry MU put 9% lower has a 5.8% yield.

MU is down 7% today at $383.43. That has pushed up its put option premium in near-term expiry periods. Value investors can short out-of-the-money (OTM) put options to set a potentially lower buy-in point.

For example, a one-month expiry put option in MU expiring April 2, 2026, has a $20.35 premium for the $350.00 put option contract. That strike price is $33.83 lower than today’s spot price, i.e., it’s 8.8% out-of-the-money (OTM).

But an investor who secures $35,000 with their brokerage firm can enter an order to “Sell to Open” this put contractand immediately receive $2,035 in their account

That’s an immediate yield of 5.814% (i.e., $2,035/$35,000).

Moreover, the breakeven point, in case MU stock falls to $350 on or before April 2, is:

$350 – $20.35 = $329.65 B/E

That is -14.7% lower than today’s price. So, you can see why value investors love shorting these high-yield puts.

In fact, going out a little further shows that even higher yields and lower breakevens are available.

For example, look at the May 15, 2026, put option. The $330 strike price put, which is –14.7% lower than today’s price, has a midpoint premium of $26.10 per put.

That works out to an immediate yield of 7.90% (i.e., $26.10/$330.00).

Moreover, the breakeven point (B/E) is 21.4% lower (i.e., $330 – $26.10 = $303.90).

That means a value investor can get paid handsomely while waiting to buy in at these lower strike prices.

After all, the target prices for MU stock are significantly higher.

Analysts have been raising their price targets (PT) for MU stock. For example, Yahoo! Finance reports that the average PT is $393.35 from 42 analysts. That is up from $356.51 a month ago, as I reported in a January 28, 2026, Barchart article.

Moreover, 23 analysts surveyed by AnaChart.com, which tracks recent analyst write-ups, have an average PT of $454.38. That’s up from $433.37 a month ago.

This means analysts believe that the underlying value of MU has increased, not fallen, in the last month.

Micron reported very strong results on Dec. 17, 2026, and its upcoming results are expected on March 25. Management said they expect “substantial new records” in revenue as well as adjusted free cash flow (FCF) for both fiscal Q2 (ending Feb. 28) and its full FY ending Aug. 31, 2026.

For example, last quarter it generated $3.9 billion in adj. FCF on $13.643 billion in revenue, a 28.6% adj. FCF margin. Analysts’ estimates for the year ending Aug. 2026 revenue are $76.9 billion, and $98.2 billion for the following year.

If Micron Technology makes a 30% adj. FCF margin, it could generate $23 billion in adj. FCF this fiscal year and $29.5 billion next year.

So, if the market values this at a 4% FCF yield (i.e., 25x multiple), the stock could be worth between $575 billion and $737.5 billion.

That is +33% higher than today’s $432 billion market cap for the 2026 estimate and 71% higher for the following year.

That sets the price target (PT) at between $510 and $656 per share over the next 12 months.

The bottom line is that shorting these out-of-the-money put options in one and two-month expiry periods is a good value investing opportunity.

On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com