Options market expects Micron shares to move 7% after earnings — CNBC
In the United States, market makers ahead of Micron Technology's quarterly report were pricing in a possible 7% move in the company's shares after the release of results scheduled for after the market close on September 30. This is slightly below Micron shares' average 8% move following the previous four quarterly reports, CNBC reports.
Call option advantage
According to Cboe LiveVol and SpotGamma, traders likely bought about 61,000 call options on Micron shares on Tuesday, compared with 37,000 put options. Call options accounted for 75% of the total $1.6 billion in premiums traded in the company's options.
At the same time, selling of call options was also notable. A significant share of such trades involved the sale of contracts with a strike price of 1150. CNBC noted that this rather indicated a bet that the shares would not exceed the market's expected move after the report, rather than a negative assessment of the company.
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Key levels and risks
As of the close of trading on Monday, the number of open put and call contracts was approximately equal. Micron's put-to-call ratio was near its one-year low, according to Barchart data.
Jason DeLorenzo, founder of the Volland platform, described dealer positioning as more optimistic than ahead of some previous Micron reports. In his view, significant open interest in put options with strike prices from 980 to 1000 could support the shares in the event of weak results, as holders of protective contracts may take profits.
Opti-View data showed 34,000 open puts with a strike price of 1000, while the most popular strike price for call options was 1200. Don Kaufman, co-founder of TheoTrade, cited the situation in the bond market among the potential risks: in his view, it could affect even trading in shares of companies associated with artificial intelligence.
