Micron Technology (MU) has spent September consolidating in a tight range between $70- and $72. There could be a break from this pattern — in either direction – as soon as next week. The chipmaker heads into the earnings confessional after the close on Wednesday, Sept. 27 for its fiscal fourth-quarter report, and ahead of the event, options traders are bracing for a larger-than-expected move.
The semiconductor stalwart has a mixed history of earnings reports. Going back two years, the stock averages a post-earnings move of 4.3%. In those last eight reports, MU has delivered three positive post-earnings reactions and five negative ones, including a 4.1% drawdown in late June. For Thursday’s trading, the options market is pricing in a 7.2% move, regardless of direction.
Micron Technology stock is 41% higher in 2023, with sharp summer pullbacks in July and August finding support at its 160-day moving average. The shares remain a chip shot from their May 30, one-year high of $74.76, but for context purposes, remain far off their Jan. 5, 2022, all-time high of $98.45.
Options traders have been betting bullishly lately. Per the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open nearly two calls for every put on the chip stock during the past two weeks. This ratio sits in the 91st percentile of its annual range, indicating the appetite for calls right now is near its highest level in the last 12 months.
MU looks like a potential premium-selling candidate ahead of earnings, per its Schaeffer’s Volatility Scorecard (SVS). With a score of just 16 out of 100, the security has consistently realized lower volatility than its options have priced in.
