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Option Mover The Moo
wrote a column · Apr 30 17:03 ·

Option Recap | Big Shorts Target Semiconductors! Memory Sector Explodes Against the Trend, Optical Communication Stocks See Brutal Correction

This week, the overall market trended towards volatile adjustments. On one hand, the conflict between the US and Iran has persisted for two months, with oil prices hovering around $110, continuing to weigh on market sentiment; on the other hand, this week's 'Wild Thursday' has arrived – Powell’s last FOMC meeting, combined with earnings reports from four out of the Magnificent Seven companies, all released in the early hours of April 30 (Beijing time), resulting in intense long-short battles.
While the broader market hesitates, stories in individual stocks and sectors are far from boring:The Big Short Burry declares war on semiconductors and memory $Seagate Technology (STX.US)$ Exploding earnings, optical communication small caps $POET Technologies (POET.US)$ Hit by order cancellations, halving in a single day... three directions, three fates, and three live case studies in options. Let’s break them down one by one.
SOXL: The big short has arrived, but the market hasn’t fully bought into it yet
On April 24, Michael Burry, the real-life figure behind 'The Big Short,' publicly announced that he had purchased $iShares Semiconductor ETF (SOXX.US)$ put options, expiring in January 2027. He frankly stated that the current semiconductor surge “lacks fundamental support and is purely a technical bubble.” This followed the PHLX Semiconductor Index just setting a stunning record of 18 consecutive days of gains.
Once the news broke, the 18-day consecutive rally of the PHLX Semiconductor Index came to an abrupt end, with pullbacks on both Monday and Tuesday. However, by Wednesday, the market seemed to have already digested this negative news – after all, Burry’s put options don’t expire until January 2027, and he is betting on a long-term bubble burst, not an immediate crash next week. $Direxion Daily Semiconductor Bull 3x Shares ETF (SOXL.US)$ Currently back near $120 (as of the close of US stocks on April 29, same below).
The market has been volatile this week. On one hand, the US-Iran conflict has persisted for two months, with oil prices hovering at $110 per barrel, continuing to weigh on market sentiment; on the other hand, this week's "Crazy Thursday" event has already unfolded – Powell’s last FOMC meeting as chair, along with earnings reports from four of the Magnificent Seven companies, all released in the early hours of April 30 (Beijing time), fueling intense tug-of-war between bulls and bears. While the broader market hesitates, the action in individual stocks and sectors is anything but dull:Big short-seller Burry takes a bold stance against semiconductors and memory $Seagate Technology (STX.US)$ Earnings explode, optical communication small-caps $POET Technologies (POET.US)$ Hit by order cancellations, halving in a single day… Three directions, three fates, and three real-life case studies in options trading. Let’s break them down one by one. SOXL: The big short-seller has arrived, but the market hasn’t fully bought into it yet On April 24, Michael Burry, the real-life figure behind 'The Big Short,' publicly announced that he had purchased put options on $iShares Semiconductor ETF (SOXX.US)$ , expiring in January 2027. He bluntly stated that the current semiconductor rally “lacks fundamental support and is purely a technical bubble.” This comes after the Philadelphia Semiconductor Index just set an astonishing record of 18 consecutive days of gains. Once the news broke, the 18-day consecutive rally of the PHLX Semiconductor Index came to an abrupt end, with pullbacks on both Monday and Tuesday. However, by Wednesday, the market seemed to have already digested...
(The design images displayed on the screen are for demonstration purposes only and do not constitute any investment advice or guarantee; market movements are frequent, and the option prices shown do not represent actual conditions. The filtering criterion is options with an initial price below $3 per unit.)
The fate of this put option is a textbook example of a roller coaster. After two consecutive days of decline in SOXL, this put option with a strike price of $99 surged from around $1 to nearly $5 — almost a fivefold increase. But here’s the problem: after SOXL rebounded on Wednesday, the latest price is still about 20% away from the $99 strike price.
What happened next? After the market came to its senses, this put option 'free-fell' back from nearly $5 to $1.65.If you didn't exit at the peak, your contract is now only up by 65% compared to your entry point — whereas just three days ago, you saw a floating profit of 400%.
It's worth noting that this contract expires tomorrow night. At the current price level of SOXL, unless there's a correction of more than 16% between tonight and tomorrow, this $99 put option will expire worthless.
Many beginners think 'getting the direction right is enough,' but options aren’t like common stocks — they have a ticking time bomb known as 'time value.'The closer it gets to expiration, the faster the time value erodes, like the last few grains of sand in an hourglass.
Even if your directional judgment is correct (the semiconductor index did fall briefly), if the underlying stock quickly recovers its losses, your options will 'shrink' much faster than the stock itself. Burry’s puts, which expire in January 2027, give him ample time; however, this put, expiring on May 1st, amounts to betting on a sharp drop within a day or two — if successful, it yields massive profits; otherwise, it goes to zero.
STX: Explosive earnings report transforms a hundred-dollar stock into a thousand-dollar one.
On Tuesday, the 28th, after the US stock market closed, Seagate Technology (STX) released its third-quarter earnings report for the fiscal year 2026, with all data showing explosive results:Revenue, profit, and gross margin all exceeded expectations. Even more impressive was the guidance provided by management, with the next quarter’s forecast significantly higher than expected, and they directly raised the revenue growth targets for the coming years. During the conference call, management clearly stated that AI-driven demand for high-capacity storage has entered a 'structural growth' phase.
This earnings report directly ignited the entire storage sector: $Micron Technology (MU.US)$ Benefiting from strong AI-driven demand for HBM (high bandwidth memory), $SanDisk (SNDK.US)$ the NAND flash business continues to be favored by the market.The revaluation of storage as a 'core component of AI infrastructure' is still ongoing, and Seagate's earnings report is the strongest evidence of this.
The market has been volatile this week. On one hand, the US-Iran conflict has persisted for two months, with oil prices hovering at $110 per barrel, continuing to weigh on market sentiment; on the other hand, this week's "Crazy Thursday" event has already unfolded – Powell’s last FOMC meeting as chair, along with earnings reports from four of the Magnificent Seven companies, all released in the early hours of April 30 (Beijing time), fueling intense tug-of-war between bulls and bears. While the broader market hesitates, the action in individual stocks and sectors is anything but dull:Big short-seller Burry takes a bold stance against semiconductors and memory $Seagate Technology (STX.US)$ Earnings explode, optical communication small-caps $POET Technologies (POET.US)$ Hit by order cancellations, halving in a single day… Three directions, three fates, and three real-life case studies in options trading. Let’s break them down one by one. SOXL: The big short-seller has arrived, but the market hasn’t fully bought into it yet On April 24, Michael Burry, the real-life figure behind 'The Big Short,' publicly announced that he had purchased put options on $iShares Semiconductor ETF (SOXX.US)$ , expiring in January 2027. He bluntly stated that the current semiconductor rally “lacks fundamental support and is purely a technical bubble.” This comes after the Philadelphia Semiconductor Index just set an astonishing record of 18 consecutive days of gains. Once the news broke, the 18-day consecutive rally of the PHLX Semiconductor Index came to an abrupt end, with pullbacks on both Monday and Tuesday. However, by Wednesday, the market seemed to have already digested...
(The design image shown on the screen is for demonstration purposes only and does not constitute any investment advice or guarantee; market conditions fluctuate frequently, and the option prices illustrated do not represent real-world values. The selection criteria were options priced below $3 per share initially.)
Following the earnings announcement, Seagate Technology surged nearly 20% at one point during Wednesday's trading session, ultimately closing over 11% higher. This option had an entry cost of less than $3 per share (1 option contract represents 100 shares). It reached an intraday high of $25.9, almost nine times its original value. Even after retreating to close at $11 ($1,100 per contract), it still delivered nearly a fourfold return from the entry price.
From an intraday high of $25.9 to the closing price of $11 — a drop of over 57% within a single day. This isn’t a 'loss'; you’re still making money, but this kind of volatility highlights that:For options based on earnings reports, unrealized gains can evaporate significantly if profits aren’t secured during the trading session.
Another detail to note: Seagate Technology is currently at $643, while the strike price of this call option is $720. This means that by the expiration date on May 8, Seagate Technology needs to rise another 12% for this call to become 'in-the-money'.The current price of $11 is entirely comprised of time value and market expectations for continued upward movement – if Seagate Technology doesn’t continue to rise in the coming week, this $11 will melt away slowly like ice.
POET: Optical communication small-cap hit by a black swan event, Put soars to the moon
$POET Technologies (POET.US)$ (Optical module/photonic integrated circuit stock) encountered the nightmare of every small-cap investor: key client Marvell abruptly canceled orders early this week. Upon the news release, the share price plunged approximately 47% in a single day on Monday, experienced volatility on Tuesday, and continued to drop nearly 20% on Wednesday, exhibiting a textbook example of an ‘A-kill’ (high-volume crash from peak levels).
The characteristic of such small-caps is often this: they rise on stories and imagination, but fall when reality slaps them down.When the largest client directly cancels cooperation, the narrative of being a photonic chip disruptor collapses instantly.
The market has been volatile this week. On one hand, the US-Iran conflict has persisted for two months, with oil prices hovering at $110 per barrel, continuing to weigh on market sentiment; on the other hand, this week's "Crazy Thursday" event has already unfolded – Powell’s last FOMC meeting as chair, along with earnings reports from four of the Magnificent Seven companies, all released in the early hours of April 30 (Beijing time), fueling intense tug-of-war between bulls and bears. While the broader market hesitates, the action in individual stocks and sectors is anything but dull:Big short-seller Burry takes a bold stance against semiconductors and memory $Seagate Technology (STX.US)$ Earnings explode, optical communication small-caps $POET Technologies (POET.US)$ Hit by order cancellations, halving in a single day… Three directions, three fates, and three real-life case studies in options trading. Let’s break them down one by one. SOXL: The big short-seller has arrived, but the market hasn’t fully bought into it yet On April 24, Michael Burry, the real-life figure behind 'The Big Short,' publicly announced that he had purchased put options on $iShares Semiconductor ETF (SOXX.US)$ , expiring in January 2027. He bluntly stated that the current semiconductor rally “lacks fundamental support and is purely a technical bubble.” This comes after the Philadelphia Semiconductor Index just set an astonishing record of 18 consecutive days of gains. Once the news broke, the 18-day consecutive rally of the PHLX Semiconductor Index came to an abrupt end, with pullbacks on both Monday and Tuesday. However, by Wednesday, the market seemed to have already digested...
(The design images displayed on the screen are for demonstration purposes only and do not constitute any investment advice or guarantee; market movements are frequent, and the illustrated options prices do not represent real conditions. The selection criteria were options with an initial price below $3 per unit.)
This option closed at just $0.12 last Friday, and has already gained about 29 times this week. If you had bought eight contracts (for less than $100) at last Friday’s close, you would now be holding nearly $2,800.
Why did it rise so sharply? Because when the underlying stock fell below the $10 strike price, this put went from being 'almost worthless' to becoming a 'profit-guaranteed in-the-money contract.' Its intrinsic value jumped directly from zero to several dollars –This is the moment of qualitative change in the options world – going 'from nothing to something.'
Everyone loves the explosive power of small-cap stocks, but not every underlying asset in the options market has active trading. Options on large ETFs like QQQ or SPY, or M7 individual stocks, may have bid-ask spreads of just a few cents; however, the spreads for small-cap stock options can reach as high as 10%-20%. Moreover, when you want to close your position, there might not even be any counterparty available.When choosing an underlying asset, first look at liquidity (trading volume and open interest), then consider price movement. This is the step that beginners most often overlook.
Three different underlying assets this week, with three completely different scenarios:
SOXL's put options:If you get the direction right but choose the wrong timing, you can still lose money.
STX's call options:Earnings season provides the best stage for out-of-the-money options, but knowing when to take profits is crucial.
POET's put options:A black swan event can explode option returns by 29 times, but illiquidity may leave you 'seeing it but unable to grab it'.
Entering with a hundred bucks and exiting with a thousand — options indeed offer the possibility of small capital leveraging big opportunities. Of course, high odds never come free. Choosing the right direction, timing, and managing your position size are all essential. Understand the market first, then act. When your rhythm is right, opportunities will never run out. See you next time for another review!
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Disclaimer
This content does not constitute any offer, solicitation, recommendation, opinion, or any guarantee regarding securities, financial products, or tools. The risk of loss in trading options can be substantial. In certain circumstances, the losses you incur may exceed the initial margin amount deposited. Even if you set contingent orders, such as 'stop-loss' or 'limit' orders, they may not necessarily prevent losses. Market conditions may render these orders unexecutable. You may be required to deposit additional margin within a short period of time. If you fail to provide the required amount within the specified timeframe, your open positions may be liquidated. However, you will still be responsible for any deficit balance in your account. Therefore, before trading, you should study and understand options, and carefully consider whether such trading is suitable for you based on your financial situation and investment objectives. If you trade options, you should be familiar with the procedures for exercising options and the rights and obligations upon option exercise and expiration.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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