Revenue Warning, Slow Demand Hurting Another Chip Stock

Options volume is today running at triple the intraday average

Digital Content Manager
Aug 9, 2022 at 10:41 AM
facebook X logo linkedin


Micron Technology, Inc. (NASDAQ:MU) was last seen down 4.6% at $58.60, after the chipmaker joined its counterpart NVIDIA (NVDA) in lowering its revenue forecast. The company said waning demand for chips used in personal computers and smartphones could weigh on its fiscal fourth quarter, and warned it may see negative free cash flow in the following quarter for the first time since 2020. However, it also announced plans to invest $40 billion in U.S. memory manufacturing through the end of the decade.

Susquehanna has already chimed in with a bear note, cutting MU's price target to $68 from $82. Analysts are still optimistic towards the chip stock, though, with 18 of the 23 covering the equity calling it a "buy" or better, while only five carry a tepid "hold" or worse.

Options traders have been quick to jump in on the action, too. So far today, 31,000 puts and 18,000 calls have crossed the tape, or triple what's usually seen at this point. Most popular is the 8/12 59-strike put, followed by the 60-strike put in that same series, with new positions being opened at both.

Bearish bets have been popular of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call open interest ratio of 1.06, which sits higher than all readings from the past year. This means puts have been getting picked up at a much faster-than-usual clip.

These options traders are in luck, as now seems like an ideal time to bet on MU's next moves. This is per the stock's Schaeffer's Volatility Scorecard (SVS) of 90 out of 100, which means the security has usually outperformed volatility expectations -- a good thing for buyers. 

A closer look at Micron Technology stock reveals it has been underperforming the broader market so far this year, with shares down 36.9% in 2022. The 80-day moving average rejected last week's rally off a July 1, nearly two year-low of $51.40, but has been pressuring the equity since early March.

 

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