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.
|MU – iron fly||Strike||Odds||Delta|
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