How to play the difficult technology of Micron

Hammered.

The Philadelphia Semiconductor Index fell 2.7% on Thursday, while Micron Technology (MU) fell nearly 10%. What gives and how should you play Micron here?

Well, Micron reports its fourth quarter results on September 20th and forecasts indicate that year shipments will still be up 20%. I am a long time Micron and I have even added shares over the last two days using the proceeds of the liquidation of my interest in Action Alerts PLUS Holding Alphabet (GOOGL).

I still have dry powder here, but I'm not at all sure of how much risk I wish to stack in Micron. Click below to see the Micron chart and you'll see why:

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The graph above shows that Micron's orientation has changed dramatically this week. The daily convergence / divergence oscillator of the moving average (MACD), the relative resistance index (RSI) and Chaikin monetary flow (CMF) are all gone to the south.

I currently own about 80% of my expected long position, but I've added half this week, so I do not feel any pain at the moment. Micron closed Thursday at $ 44.65 and my next purchase is $ 41. It is there that I intend to add the last fifth to my intended size for this name. My own tolerance for the stock ends there.

My plan for Friday is to sell put and name calls, as follows:

• Sell ​​on September 21st at a price of $ 41, which closed Thursday at $ 0.98.
• Sell ​​September 21 calls for $ 50, which ended Thursday at $ 0.68.

Both of these sales will reduce my net base for Micron by $ 1.66 per share. It is not too shabby.

Yes, I could end up having to "eat" a MU stock at $ 41, but I will already have reduced that net purchase price by more than 4% thanks to the $ 1.66 that I 'd have. got through the above transactions.

And yes, I should maybe take a profit on MU at $ 50 with the option to buy, but it would not be good?

(A longer version of this column was released at 7:36 am ET on Real Money, our premier site for active traders.) Click here for articles of this type from Stephen "Sarge" Guilfoyle, Jim Cramer, and other experts earlier in day trading.)