Market watchers have noted that Micron (NASDAQ: MU) shares have surged 44% this year, outpacing the broader semiconductor space nearly four-fold.
As the chipmaker's stock sits nearly 10 percent off its May high, Stacey Gilbert, head of derivative strategy at Susquehanna, said the options market is doing something unusual ahead of Wednesday's earnings report. She has told the media to watch that the stock's implied move ahead of earnings is around 7% to 8% in either direction, more or less in line with its typical performance on earnings.
However, recent trading has had more of a two-way sentiment, a notable departure from the usual upside call buying. In other words, sentiment is not as bullish as it's typically been.
The company's analyst day in late May removed some of the volatility from the market, but there is still a decent amount of volatility being priced into the stock.
Susquehanna – which also owns Micron shares -- covers those shares with a positive rating, and a price target of $80, implying about 35% upside from current levels.
Bottom line: Gilbert says Micron options are implying a less-bullish sentiment around the stock ahead of earnings.
Other market watchers noted that Micron’s incredible rise has happened despite fears of a cyclical top in the semiconductor industry and Chinese trade tensions that have the power to affect foreign revenues. This outstanding performance has set the stage for the next leg of a round trip into the 2000 bubble high, a journey that has now taken nearly two decades to complete.
Micron opened Friday down 33 cents to $58.85
