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The million-dollar bet on Micron earnings

Micron Technology shares were falling Tuesday ahead of the company's fiscal first-quarter earnings report scheduled for after the bell. The chipmaker is down nearly 5 percent this year, but some traders are betting that it could soon soar.

On Monday, when Micron options volume ran 1.5 times its daily average, and the number of calls traded were double that of puts, one trader rolled a bullish bet on the company.

Specifically, the trader sold 3,700 January 35-strike calls and used the proceeds to buy 3,700 of the July 35-strike calls for $3.65. The trade, which cost a total of more than $1 million, is a bet that Micron shares will surge above $38.65 per share by July expiration, or up another 17 percent from current levels. That would also be a more than 10-year high.

"The stock is very cheap with double-digit sales growth expected in 2015," said Dan Nathan of Riskreversal.com. "To add, options prices aren't particularly expensive, they haven't gotten to the levels where they were prior to their prior quarter's results."

Micron, which counts hedge fund titans David Einhorn of Greenlight and Ray Dalio of Bridgewater Associates among its shareholders, (and even television personality Regis Philbin), has been one of the hottest trades over the past 12 months, up around 62 percent. Although it should be noted that according the latest 13F filing on Sept. 30, 2014, Einhorn appears to have lightened his position.

But despite the run, Nathan sees the stock is pushing up against major technical resistance.

"When you look at the stock, it's actually really consolidated a lot over the last six months and it's really failed to breakout above that $35 [per share] level, which is really interesting when you think about that call strike that [the trader] chose," Nathan said on Monday's "Fast Money."

Analysts expect Micron earnings per share to come in at 96 cents and revenue at $4.6 billion in Tuesday's results, according to FactSet.

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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