Traders can use call options to capitalize on a stock's move higher while simultaneously limiting their downside risk.
If Micron doesn't hit $48 by next Friday the traders will only lose the price they paid for the call option - typically a fraction of what it would cost to buy the stock - plus the commission fee. On the flip side, should Micron blow past $48, the call-option gives traders the right to buy the stock at $48 instead of the higher level.
Najarian spotted other interesting options activity in software company Red Hat, which also reports earnings on Tuesday after the bell.
This month traders bought more than four thousand January 130 calls that expire on January 19. As of Thursday's close Red Hat was trading at $126.13, so to hit $130 it would have to rise 3 percent. Shares of the Raleigh, North Carolina-based company are up more than 80 percent this year.
Traders are also predicting that Paychex moves higher after reporting positive earnings.
This month traders have bought nearly 27,000 calls at the January 70 strike price, according to Najarian. The payroll-processing company reports earnings on Thursday before the bell, and according to FactSet estimates, analysts are expecting earnings per share of 59 cents on $823.5 million in revenue. These calls, which expire January 18, were trading at $0.57 at the start of the month. As of Thursday's close, they were at $1.38.
Elsewhere in the market, Najarian and his brother Pete Najarian, Investitute co-founder, have seen heavy options activity in AT&T and Wells Fargo.