Micron Stock Cools Off Ahead of Earnings

MU is also seeing attractively priced premiums, even with earnings looming

Deputy Editor
Jun 26, 2020 at 2:45 PM
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Micron Technology Inc (NASDAQ:MU) is gearing up for its fiscal third-quarter earnings, due out after the close next week on Monday, June 29, with the shares taking a dip on the charts ahead of the event. At last check, the stock is down 1.2% at $48.59, dipping back below a key trendline of 2020.

When we last checked in with MU this week, the stock was falling on a downgrade. Since then, Micron has fallen even lower, and is now meeting overhead pressure at the 120-day moving average. This trendline, prior to a June revival, had served as a stiff ceiling since an early-March bear gap. Micron shares are headed toward a weekly loss, and now sit at the -10% year-to-date level.

MU June 26

Looking back, MU saw positive next-day returns after five of its last eight earnings reports, averaging a swing of 6.7% regardless of direction, including a 5.4% pop back in March, that preceded a rally up to the $50 area. This time around, the options market is pricing in a slightly larger move at 8.4%, more than the average intraday move of 6.7% in the last two years, regardless of direction.

Although earnings are right around the corner, options seems like a decent way to go at the moment. It's Schaeffer's Volatility Index (SVI) of 62% stands in the 30th percentile of its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 


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