Earnings Preview: Micron Technology, Inc. (MU)

Micron Technology, Inc. (NASDAQ:MU) will take its late-season turn in the earnings confessional after tomorrow's close

Sep 30, 2015 at 10:51 AM
facebook X logo linkedin

We've reached the tail end of earnings season, and while many are keeping a close eye on Alcoa Inc (NYSE:AA) -- whose trip into the confessional next Thursday evening will unofficially mark the start of a new earnings season -- there's still one notable name on deck. Specifically, semiconductor concern Micron Technology, Inc. (NASDAQ:MU) is slated to take its turn on the earnings stage tomorrow night.

Ahead of the event, MU -- along with the broader equities market -- is in rally mode, up 4.8% at $15.07. However, this represents a stark contrast to the stock's withstanding trajectory. Year-to-date, in fact, the security has shed 57% of its value, and notched a fresh two-year low of $13.50 on Aug. 24.

Option traders have kept the faith, though, and at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MU's 10-day call/put volume ratio of 5.64 ranks in the 98th percentile of its annual range. In other words, calls have been bought to open over puts at a faster clip just 2% of the time within the past year.

Echoing this is MU's Schaeffer's put/call open interest ratio (SOIR) of 0.57, which sits lower than 77% of all similar readings taken in the past year. Simply stated, short-term speculators are more call-heavy than usual toward the stock.

In the past 10 trading days, MU's November 20 call has seen 25,038 new positions added -- the most of any strike. Today, calls are crossing at six times what's typically seen at this point in the day. Most active is the security's January 2016 20-strike call, which is seeing some buy-to-close activity, per the ISE. Meanwhile, new positions are apparently being opened at MU's weekly 10/2 15- and 17.50-strike calls, which expire at this Friday's close.

Those purchasing new positions on MU ahead of earnings are willing to pay a pretty penny. Specifically, the stock's Schaeffer's Volatility Index (SVI) of 76% sits just 11 percentage points from a 52-week peak. Plus, the equity's 30-day at-the-money (ATM) implied volatility of 70.4% ranks in the 99th annual percentile. What this pair of indicators is showing is that MU's short-term options are pricing in elevated volatility expectations at the moment.

Looking back over the past eight quarters, Micron Technology, Inc. (NASDAQ:MU) has averaged a single-session post-earnings swing of 7.1% -- including an 18.2% plunge last June. This time around, the stock's near-term ATM straddle is pricing in a loftier 10.2% swing.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI