Micron Technology is an American corporation based in Idaho, and with manufacturing facilities around the world. In the technology sector, you can expect volatility in the pricing, making it suitable for profitable spread trading provided you can limit your losses. It specializes in semiconductor devices such as DRAM (dynamic random access memory) chips and CMOS sensing chips. It is ranked amongst the top 20 semiconductor companies in the world.
It was founded in 1978 as a consulting company, and a few years later started producing 64K DRAM chips from a new facility. It went public in 1984, and was listed on the NASDAQ exchange with the symbol “DRAM”. In 1990 it relisted on the New York Stock Exchange using the symbol “MU”, and in 2009 transferred back to the NASDAQ retaining the same symbol. NASDAQ is the exchange normally associated with technology companies.
This weekly price chart shows the volatility in recent years that you might expect in this fast-moving industry.
The focus at Micron has always been on producing competitive, low-cost devices, which is perhaps why it has survived so long despite several collapses in the market for memory chips, including one in the mid 1980s when Intel was forced to leave this type of manufacture. Such collapses also afforded Micron the opportunity to acquire other manufacturers, and it now has production facilities in Italy, Singapore, and Japan, in addition to its US facility. It is estimated that with latest acquisitions, Micron has nearly a quarter of the memory chip market.
Despite a move into making computers in the 1990s, Micron’s business is firmly based in wafer chip production. In fact a spinoff company involved in the computer manufacture went bankrupt in 2008. With the ups and downs that you can see in this chart, it is evident that an experienced spread better will find many opportunities.
Micron Technology Rolling Daily
If you are happy spread betting on a volatile stock price such as a technology company, then you may find that Micron Technology provides you with the opportunities you need. The rolling daily prices are currently 612.0 – 614.0. That means you can open a bet that the price goes up, a long bet, at 614.0, and you could choose to stake £3 per point.
If you are proved correct, and the price goes up to 673.5 – 675.5, you may be tempted to cash in and collect your winnings. If you do this, you can work out how much money you have made. Your opening bet was placed at 614.0, and it closed at a price of 673.5. In other words you have gained 673.5 minus 614.0 points, which is 59.5 points. For your given stake, you have won £178.50.
However, even the most experienced traders have their share of losses. If the price went down after you made your bet, you might choose to accept your loss and close the bet when the price fell to 572.3 – 574.3. The opening price was again 614.0, but this time the closing price was 572.3. The difference between these is 41.7 points, so for your stake of £3 per point you would have lost £125.10.
One way that many experienced traders use to help keep their losses down is to set up a stoploss order every time they place a bet. This requires your spread betting provider to close a losing trade once it reaches a certain level, whether or not you’re watching the market. If you use this, you might find that the bet would be closed by your broker if the price fell to 587.2 – 589.2. In this case, the closing price would be 587.2 which taken away from the opening price of 614.0 is a loss of 26.8 points. That amounts to £80.40.
Micron Technology Futures
With a futures based bet on Micron Technology, you can wait for weeks or months for the price move in your favour without incurring any additional charges, as you might with a rolling daily bet. The current price quoted for the far quarter futures style bet is 612.4 – 619.8. Taking a bearish attitude to this stock which is quoted on the NASDAQ exchange you could bet £5 per point on a sell or short spread bet at 612.4.
First consider if your bet is a winner, and the price falls to 526.2 – 532.8, at which time you close your trade and collect your profits. The starting price was 612.4, and your short bet closes at 532.8 for a point difference of 79.6. With a bet of £5 per point, your winnings amount to £398.
Secondly, perhaps your bet does not work out and the price rises to 679.3 – 685.4 before you decide to close your bet and cut your losses. The bet closes at the buying price of 685.4, so taking away the opening price of 612.4 you have a loss of 73.0 points. For your chosen size of stake, this means you have lost £365.
Many spread traders decide to use stop loss orders to protect their money in case of loss. With a stoploss order, your betting provider will close a losing trade for you whether or not you are online or watching the market. All you do is decide how much of a loss you can bear. Unless you specifically ask for a guaranteed stop loss, the price you receive is not certain, but it is usually close to what you ask for. Say with a stoploss order your bet is closed out at a price of 658.2 – 664.5. The opening price was 612.4 and the closing price 664.5, which means your short bet has lost 52.1 points. With your stake, that costs you £260.50.