Micron Stock Surges on Earnings Beat

MU options traders are expecting more upside this week

by Lillian Currens

Published on Jun 26, 2019 at 10:19 AM

The shares of chipmaker Micron Technology, Inc. (NASDAQ:MU) are soaring in early trading, up 11.7% at $36.50, after the firm announced fiscal third-quarter earnings and revenue that exceeded expectations. Micron also forecast a recovery in chip demand later this year, and said it had begun "lawfully" shipping a subset of products to China's Huawei once again, despite President Donald Trump's wishes. As such, MU options are flying off the shelves today.

Needham already lifted its rating on Micron stock to "buy" from "hold" -- and other analysts could follow suit. Prior to earnings, several analysts were cutting their MU price targets, and while 14 consider MU a "buy" or better, 11 analysts have slapped the equity with a "hold" or worse recommendation. The consensus 12-month price target of $43.21 represents an 18% premium to current levels. 

MU has spent the past few weeks trading atop support in the $32 region, which coincides with the equity's year-to-date breakeven. However, today's surge has the stock trading north of its 30-day moving average -- a level of recent resistance --  for the first time since early May, and set for its best day since January 2016. 

Meanwhile, MU has seen roughly 104,000 calls and 81,000 puts change hands so far today -- seven times the average morning volume. It looks like some traders may be buying to open the weekly 6/28 37-strike call -- the most active option so far -- to bet on more upside for the shares this week. By purchasing the calls to open, the buyers expect Micron stock to rally north of $37 by Friday's close, when the options expire.

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