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Micron Technology, Inc. (MU) Traders Bet On an Earnings Win

Micron Technology, Inc. call volume soared to three times typical levels on Thursday

by 3/14/2014 9:43 AM
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Option Brief: Call players swarmed Micron Technology, Inc.'s (NASDAQ:MU) options pits on Thursday, sending volume to three times the average daily pace. By the numbers, 267,000 calls changed hands, compared to 75,000 puts. In response to this increased demand, MU's 30-day at-the-money implied volatility shot 14% higher to 61.5% -- its loftiest perch since Oct. 10.

The most active strike on the day was MU's weekly 4/4 24-strike call, where three-quarters of the 26,146 contracts traded did so at the ask price, pointing to buyer-driven activity. IV rose 10.9 percentage points, and the majority of the volume translated into open interest overnight, making it clear that new bullish positions were initiated.

The lifetime of these calls encompasses Micron Technology's fiscal second-quarter earnings report, which is slated for release after the market closes on Thursday, April 3. Considering the equity tacked on an impressive 9.9% in the session following MU's last quarterly showing, yesterday's call buyers may be hoping for more of the same. The options market seems fairly confident the stock will be above the $24 mark when the closing bell sounds on Friday, April 4, as delta for the call is docked at 0.54.

Micron Technology, Inc.'s (NASDAQ:MU) impressive price action in the wake of its fiscal first-quarter results just highlights the stock's withstanding technical tenacity. Year-over-year, the shares have surged nearly 150% to trade at $24.11. As noted on Monday, leading the equity higher has been its 40-day moving average -- and as Schaeffer's Senior Quantitative Analyst Rocky White pointed out, a recent pullback to this familiar layer of support could spell additional gains going forward. Specifically, in the nine other times this signal has occurred, MU has averaged a 21-day gain of 6.2%, and is positive 88% of the time.


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