Micron Technology Stock Lower on Trade Tensions Ahead of Earnings

MU options are pricing in a much bigger-than-usual earnings reaction

Managing Editor
Jun 19, 2018 at 12:34 PM
facebook X logo linkedin


Chipmaker Micron Technology, Inc. (NASDAQ:MU) is slated to report fiscal third-quarter earnings after the close tomorrow. Micron stock is down 1.2% at $57.78, at last check, suffering alongside other tech names as China trade tensions continue to heat up. What's more, MU options are pricing in a much bigger-than-usual move for the stock after earnings.

MU has picked up 85% over the past 12 months, and notched a 17-year high in late May. Since then, the shares have tested their footing in the $56-$57 region -- where Micron was trading before a May 22 bull gap, and home to the equity's ascending 30-day moving average.

Daily Chart of MU Since December with 30MA

Digging into earnings history, MU closed lower in the session following the company's last report, suffering an 8% drop. Widening the scope, the stock has averaged a one-day post-earnings swing of 6.9% over the past two years, regardless of direction. However, the options market is pricing in a larger-than-usual 13% move for Wednesday's trading, per data from Trade-Alert. It should be noted, though, that MU has been one of the most volatile S&P 500 stocks in the summer months, historically -- a boon for premium buyers.

Digging deeper, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.88 currently ranks in the highest percentile of its annual range. And although the ratio suggests that short-term calls still outnumber puts on an absolute basis, the elevated percentile indicates that near-term traders have rarely shown a greater preference for MU puts over calls in the last year.

Meanwhile, Micron appeared on our internal filter of stocks that could enjoy a short squeeze. Specifically, Schaeffer's Senior Quantitative Analyst Rocky White looked for stocks in which short interest has increased by at least 25% since its low over the past year, and for which shorts are at a loss of at least 8%.

On the flip side, analyst attention has been overwhelmingly optimistic on Micron Technologies stock. Of the 25 analysts covering the chip concern, 19 sport "buy" or "strong buy" recommendations. At the same time, MU's average 12-month price target of $76.97 prices in a 32% premium to current levels.

 

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