MU Analysis

Micron Technology Inc. (MU)

Update 4/4/2017: MU gapped upward after earnings were published and then fluctuated within a narrow sideways band. I considered the pattern to be unlikely to return to profitability prior to expiration and I exited.

At the close shares were up 8.2% over 12 days, or a +249% annual rate. The options position produced an 11.8% loss on debit for a -360% annual rate.


MU publishes earnings on Thursday after the closing bell.

I shall use the APR series of options, which trades for the last time 29 days hence, on April 21.

Implied volatility stands at 49%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.

MU’s IV stands in the 37th percentile of its annual range and the 56th percentile of its most recent broad movement.

The price used for analysis was $24.05.

Premium: $2.31 Expire OTM  
MU – iron fly Strike Odds Delta
Long 31.00 90.6% 12
Break-even 28.31
Short 26.00 47.9% 57
Short 26.00 52.3% 43
Break-even 23.69
Long 22.00 88.6% 9

The premium is 52% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered a position on MU as described above. The stock at the time of entry was priced at $26.36.

By Tim Bovee, Portland, Oregon, March 23, 2017

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