MU was traded as planned so far before earnings. if MU should go up to 75-80 by any chance next week, i will buy back jan puts. if it goes up over 80, i may buy nov or dec puts. the reason:
1) me think spot prices have topped. i expect spots will go down from here, and we may see around $10 for 64MB by year end.
2) big OEMs have not expected to (or will) pay much higher prices for their DRAM. Dell said something last week like they would not increase their PC prices because DRAM prices were up. these guys know much more than WS dear Rat analysts do about where components' prices will go. if they are forced to pay much higher prices, what is the first thing to do to keep their box prices down? they will reduce MBs in every box. thus the DRAM shortage will become an over supply again. so i think DRAM makers do not have much power to force those big guys to pay big bucks for DRAM.
3) small box makers are the most vulnerable ones so far for the DRAM situation. but, think about this, if they couldn't make much money when DRAM prices were much much lower, will they buy DRAMs like crazy at current prices? the answer i think is no. remember, they cannot hike their box prices because CPQ or DELL and the like will not do that. they, just like you and me, will not just want to make money for other guys. so, if DRAM price keep high for a while, i think these small guys will simply reduce their box production, hence reduce the demand of DRAM.
4) general PC consumers will simply delay or cancel they DRAM upgrades or PC purchases because most PC users know and get used to that hardware prices will go down not up. i spent more than $300 for 16MB ram a few years back. will i do that kind silly thing again? no way.
5) Taiwanese DRAM makers will come back faster than most people have expected. we will know that in next couple weeks.
6) i think DRAM channels or distributors will start to dump their inventories soon when they realize DRAM prices will not keep up.
7) and more
......
good trading, all
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