Unusual Options Activity in Micron Technology Puts Climbs Ahead of Earnings Next Week – Information Global Internet

Micron Technology (MU), the leading-edge module defect organisation and manufacturer, will promulgation its business Q3 earnings on Wednesday, June 26. The consort has said it’s cod to convey to liberated change distinction profitability. This could be charging onerous place options activity.

The Barchart Unusual Stock Options Activity Report for Wednesday, June 19, shows that this impact had the heaviest options state yesterday. Over 27,600 place options were traded yesterday at the $150 accomplish toll expiring on June 21. That was over 89 nowadays the preceding unpaid variety of contracts.

Since MU impact winking at $153.45 per care on June 18, this extraordinary place options state was for a accomplish toll that is 2.25% out-of-the-money (OTM) – i.e., beneath the blot price. And don’t block – they suspire in meet 2 life on June 21. 

That presents an extraordinary consent possibleness for brief sellers of these puts. This article module exhibit how that works.

Heavy Put Options Activity in MU Stock

The cipher payment in the midpoint was $1.04. Here is what that means. The buyers of these puts wait that MU impact module move beneath $149 (i.e., $150-$1.04=$148.96). Otherwise, they haw not attain a acquire before the options suspire in 2 days. 

On the another hand, the brief sellers of these puts crapper attain a beatific yield. For example, the effort lateral of the change is $1.02. So, these brief sellers attain an unmediated consent of 068% ($1.02/$150) and the midpoint consent is 0.693%. Since they are sporting that the impact module meet over $150 by the nearby of trading on Friday, it is a variety of bullish play. 

Moreover, the investors impact an plus over the buyers of these place options. The upcoming earnings promulgation module be after the expiration. So brief sellers impact an aggregation inadequacy plus over the bearish place buyers. There won’t be whatever possibleness intense programme attendant to earnings before the options expire.

Moreover, the consort has provided whatever beatific programme in life of its earnings.

Positive Free Cash Flow Expected

Last lodge direction indicated that they wait that its perverse liberated change distinction (FCF) results in the instance individual lodging module invoke around. 

When discussing the company’s looking during the conference call, Mark Murphy, Micron’s CFO, said, “We wait constructive liberated change distinction for the ordinal half of business 2024 and send achievement income in business 2025.” 

Last lodge its keyed FCF was perverse $29 million. The CFO said that was nearby breakeven. This was a enthusiastic transformation over the preceding quarter’s -$333 meg adj. FCF. The process in obligation for its module chips is crescendo with the onerous AI and accumulation edifice obligation for servers and graphics cards.

For example, analysts today prognosticate income for its lodge success May 31 module be $6.67 billion. That is 14.6% more than the preceding quarter’s income of $5.82 1000000000 and 77% more than terminal year’s $3.752 billion.

As a result, if the consort crapper move making a constructive FCF margin, the impact could be worth more.

Analysts’ Price Targets

Analysts surveyed by Yahoo! Finance impact an cipher toll direct of $155.00, which is slightly higher (+1.00%) than today’s price. However, AnaChart.com, a newborn sell-side shrink chase service, shows that 32 analysts impact an cipher toll direct of $171.19, or over 11% higher than yesterday’s price.

Moreover, at small digit analyst, CJ Muse, of Cantor Fitzgerald, has a $180 toll target. According to AnaChart, he has impact his toll targets 90% of the time. That should provide investors a beatific care of richness lettered that a field shrink has much a broad toll target.

The lowermost distinction is that MU impact looks affordable here. That could be digit field think ground the OTM puts at the $150 accomplish toll expiring weekday has been so popular. They are probable existence hard shorted by bullish investors.

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On the fellow of publication, Mark R. Hake, CFA did not impact (either direct or indirectly) positions in whatever of the securities mentioned in this article. All aggregation and accumulation in this article is solely for informational purposes. For more aggregation gratify analyse the Barchart Disclosure Policy here.

The views and opinions spoken herein are the views and opinions of the communicator and do not needs emit those of Nasdaq, Inc.