Daily options selling strategy | Storage and optical communication remain hot! Micron soars over 6% to a new high, AAOI surges 24%. How to use options for precise positioning?

I. Market Barometer

In the previous trading session, the three major U.S. stock indexes posted modest gains. The storage and optical communication sectors benefited from an explosion in computing power demand and high industry order activity, leading the tech sector, providing a quality setup window for options selling strategies.

II. Focus on Hot Targets

$Micron Technology (MU.US)$ : Rose over 6% to new highs in the previous trading session

$Micron Technology (MU.US)$ Closed up 6.50% at $795.33 in the previous trading session, with a total trading volume of $56.224 billion, leading the storage sector.

On the news front, WSJ reported that Micron's CEO visited China alongside business leaders such as Trump, Musk, and Cook. The market expects further deepening of U.S.-China cooperation in the tech field. Coupled with sustained high demand for AI server HBM, the company, as the global leader in memory chips, is expected to benefit directly.

Technically, Micron's stock price continues to rise, holding firmly above the 5-day moving average, reaching a record high of $818.67 intraday. However, the doji at the high indicates potential market divergence. The current IV percentile is at 100%, in the highest historical volatility range, making option pricing relatively expensive, suitable for options selling strategy deployment.

$Applied Optoelectronics (AAOI.US)$: Surged 24% in the previous trading session

$Applied Optoelectronics (AAOI.US)$ The previous trading day closed up 24.14% at $184.90, with a total daily turnover of $2.941 billion, outperforming the average level of the optical communication sector.

In terms of news, benefiting from the continuous surge in demand for 800G/1.6T optical module products, the company, as a core supplier of high-speed optical engines, has high order visibility for Q2 2026. Industry research reports show that the supply-demand tension in upstream optical chips and optical components is expected to continue until the second half of 2026, and the company’s profitability is expected to keep improving. Coupled with the confirmation that certain optical communication sector stocks $Lumentum (LITE.US)$ will officially be included in the Nasdaq 100 Index on May 18, and NVIDIA’s investment in optical communication companies, positive developments in the industry continue to emerge, driving overall valuation increases in the optical communication sector.

Technically, AAOI's stock price reached an intraday high of $190.96, breaking through the previous consolidation platform, showing strong upward momentum. The increase in trading volume reflects active capital inflow. The current IV percentile is in a historically high volatility range, making it suitable for seller strategy deployment.

III. Seller Options Strategy

1. Cash Secured Put: Sell 1 contract $Micron Technology (MU.US)$ 20260618 600P, estimated margin requirement (for reference only): $60,000 ($600 × 100)

Opportunity filtering logic:

For targets that still have long-term prospects but have risen sharply in the short term, if investors are concerned about the risk of a pullback when buying the underlying stock at a high price, they can sell Puts to collect premiums. If the stock price continues to rise or remains volatile at high levels, this strategy can enhance the annualized return on idle funds. If the stock price pulls back to near the strike price, it also allows for entering the position at a more favorable planned price.

Micron's fundamentals benefit from the explosive demand for AI storage and favorable policies, with a clear long-term growth trajectory. Even if exercised, it would be equivalent to acquiring the underlying stock at a cost of $600, providing a certain margin of safety.

Covered Call: Sell 1 contract $Applied Optoelectronics (AAOI.US)$ 20260515 220C, estimated stock holding cost (for reference only): $18,490 ($184.9 × 100)

Opportunity filtering logic:

As an investor holding the stock, when the target has risen significantly in the short term and faces pressure from potential high-level volatility and pullbacks, there is concern about a short-term decline while not wanting to miss out on subsequent industry gains by selling directly. At this point, selling Calls can generate premium income and reduce holding costs. If the stock price continues to adjust through volatility, the premium can partially hedge against declines. If the stock price rises above the strike price, being exercised would be equivalent to selling the stock near $220, locking in phased profits.

AAOI, as a core supplier of high-speed optical engines, benefits long-term from the explosive demand for optical computing power connections. With recent sharp gains, it shows demand for consolidation and is suitable for investors holding the underlying stock to enhance returns through a covered strategy.

IV. Risk Control Reminder

Although the seller strategy has a high probability of success, investors must still manage risks effectively:

– Position management is key:The biggest risk for option sellers lies in black swan events. It is recommended that margin exposure for a single underlying should not exceed 20% of total capital. Never sell options beyond your capacity for the sake of greedy premiums.

– Timely rolling of covered call options: When a covered call option becomes deeply in-the-money (stock price far exceeds the strike price), and if the underlying stock is still viewed favorably, decisively 'roll' the position — that is, close the current option by buying it back and simultaneously sell an option with a later expiration date and a higher strike price to avoid having the stock called away at a low price.

– Cash-secured put options warn of 'left-tail risk':For cash-secured puts, if the stock price collapses due to deteriorating fundamentals (rather than a normal pullback), do not hold on stubbornly. At this time, stop losses should be executed, or 'rolling down' can be employed to buy time and wait for volatility to normalize.

Make the most of the options seller zone to understand income strategies for selling options,Earn option premiums!

Options Risk Warning

An option is a contract that grants the holder the right, but not the obligation, to buy or sell an asset at a fixed price on a specific date or at any time before that date. The price of an option is influenced by various factors, including the current price of the underlying asset, the strike price, time to expiration, and implied volatility. Implied volatility reflects the market’s expectations for the level of volatility in the option over a future period. It is a data point derived inversely from the Black-Scholes option pricing model and is generally regarded as an indicator of market sentiment. When investors anticipate greater volatility, they may be more willing to pay a higher price for options to hedge risks, resulting in higher implied volatility. Traders and investors use implied volatility to assess the attractiveness of option prices, identify potential mispricings, and manage risk exposure.

Disclaimer

This content does not constitute any offer, solicitation, recommendation, opinion, or guarantee for any securities, financial products, or tools. The risk of loss in trading options can be substantial. In some cases, losses incurred may exceed the initial margin deposited. Even if you set contingency orders, such as 'stop-loss' or 'limit' orders, these may not necessarily prevent losses. Market conditions may make such orders unexecutable. You may be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be responsible for any shortfall in your account resulting from such liquidation. Therefore, before trading, you should study and understand options and carefully consider whether such trading suits 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 expiration. Options trading involves extremely high risks and is not suitable for all investors. Investors should read Characteristics and Risks of Standardized Options carefully before engaging in any options trading strategy.

Editor/Doris

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