Micron Technology Inc news page
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Monday March 17 4:33 PM EST
US OPTIONS FOCUS/Good earnings expected at Micron
CHICAGO, March 17 (Reuter) - Investors were buying Micron Technology Inc call options ahead of the company's quarterly earnings, expecting a solid profit report, traders said Monday.
"We have a lot of speculation on the upside. There are a lot of call buyers," one trader at the Pacific Exchange said, referring to Micron options.
"They're buying a lot of the March 45s, March 50s, April 45s and April 50s, which are trading a lot higher than they have been in a while," he said.
"So it looks like people are thinking (earnings) are going to be better" than expected.
Micron is scheduled to report after the close of trading Monday. The stock was down 1-3/4 at 43-1/2 in late trading on heavy turnover of 11.5 million shares.
Traders said Micron held up well in the face of a sharp market selloff that had reversed course by late trading. The stock reached a session low of 42-5/8.
Jon Najarian, president of Mercury Trading, the designated primary market maker for Micron options at the CBOE, said investors were snapping up the 45 calls.
"They're all playing to buy the 45 calls," Najarian said. "There's minor interest in the puts from a few people who are just playing for a downside number."
Traders said estimates for Micron's quarterly earnings ranged from about $0.05 a share to $0.28, with a mean around $0.15 per share.
"The 'whisper' we're hearing is $0.16 (a share)," Najarian said, referring to the figure that traders expect.
He said some large funds expect the stock to rally through 47 a share Tuesday if the earnings top $0.16 a share.
If the earnings are light, the stock could drop to support around 37-1/2, he said.
"They're saying there's slightly less upside than downside right now because it's had such a strong run," Najarian said.
Traders said volatilities in Micron options had risen sharply over the last few trading sessions ahead of the earnings and popped further Monday
Najarian said volatility on the March 45 calls, which traded a total of about 8,870 contracts, reached near 90 percent Monday, up from the low 60-percent region late last week.
He said unless the earnings are well below estimates and the stock falls 10 or more points Tuesday, the volatility is likely to come in sharply Tuesday, even if the stock declines. |
