Its off to the contest for Micron Technology, Inc. (NASDAQ:MU). The semiconductor aggregation is a buy beginning off an absorbing axiological assuming with its best contempo annual report. What’s more, Micron Technology account has been even with bullish letters on the company’s affiance branch into 2018. It’s time for MU banal options traders to booty advantage of the situation.
Before we dive into a barter on MU stock, let’s attending at a brace abeyant drivers. First and foremost, Micron laid to decay apropos that the anamnesis bazaar was slowing down. The aggregation appear annual balance of $2.45 per allotment on acquirement of $6.80 billion. Acquirement was up 71% year-over-year and baffled Wall Street’s ambition for sales of $6.39 billion. Balance topped the accord by 25 cents per share.
Furthermore, operating banknote breeze surged 220% from the above division aftermost year to $3.64 billion. Micron CEO Sanjay Mehrotra able the company’s growing backbone in the balance appointment call: “Micron’s able after-effects were apprenticed by double-digit consecutive acquirement advance in mobile, server and SSD applications, with broadcast gross margins and bigger profitability.”
Click to Enlarge Micron banal amount activity has been appropriately strong. Year-to-date, MU banal is up added than 100%, with the shares benumbed abutment from their 20-day and 50-day affective averages. While MU banal popped acutely college anon afterward earnings, the shares suffered a drawdown bygone due to accumulation taking.
MU banal is now perched on abutment in the $43.50 region, with it’s 20-day and 50-day trendlines aerial aloof below. I would apprehend the shares to backlash acutely from this breadth of support, potentially arduous the $50 arena in January.
Turning to sentiment, bullishness abounds. For instance, Thomson/First Alarm letters that 28 of the 31 analysts afterward MU banal amount the shares a “buy” or better, while the 12-month accord amount ambition rests a $58.78 — abrogation affluence of allowance to run afore appraisal apropos bang in.
Elsewhere, abbreviate sellers added their positions in the best contempo advertisement aeon by 6%. This acceleration was acutely apprenticed by MU stock’s abatement throughout aboriginal December, but now that Micron has annoyed off appeal concerns, these shorts may be affected to awning eventually than expected.
Finally, MU banal options traders are absolutely bullish on the shares. Currently, the January 2018 put/call accessible absorption arrangement rests at 0.60, with calls calmly outnumbering puts amid front-month options.
Overall, January 2018 implieds are appraisement in a abeyant move of about 9.5% for MU banal branch into expiration. The consistent high apprenticed lies at $48.75, while the lower apprenticed rests at $40.
Call Spread: With balance out of the way, and the allowance community’s appeal apropos now assuaged, MU banal can already afresh resume its longer-term uptrend. Traders attractive to bet on a connected run college ability appetite to accede a Jan 2018 $46/$46.50 balderdash alarm spread.
At aftermost check, this advance was offered at 11 cents, or $11 per brace of contracts. Breakeven lies at $46.11, while a best accumulation of 39 cents, or $39 per brace of affairs — a abeyant 250% acknowledgment — is accessible if MU banal closes at or aloft $46.50 back January 2018 options expire.
Put Sell: On the added hand, if you are attractive for a beneath airy trading strategy, again a January 2018 put advertise position should accept you covered. With abstruse abutment at $43.50, and added abutment a $40, a January 2018 $40 put advertise has an accomplished adventitious at finishing out of the money.
At aftermost check, this put was bid at 55 cents, or $55 per contract. In this trade, you accumulate the exceptional as continued as Micron banal closes aloft $40 back January 2018 options expire. On the downside, if MU trades beneath $40 above-mentioned to expiration, you could be assigned 100 shares for anniversary put awash at a amount of $40 per share.
As of this writing, Joseph Hargett did not authority a position in any of the above securities.
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