Micron, up 50% this year, could see a huge swing on earnings this week

Micron's run has been nothing short of miraculous. The stock has surged 50 percent in 2018 and more than 130 percent over the last year.

Investors should prepare for some bigger swings from the stock when it reports earnings on Thursday, says Susquehanna derivative strategist Stacey Gilbert.

Some extra volatility and risk are being priced into this quarter, said Gilbert. Here's what she said investors should look out for.

  • The options market is implying a 9 percent move in either direction when Micron reports, higher than the typical 6 percent move in the previous four quarters. Micron added 4 percent the day after it reported first-quarter earnings in December.
  • It looks as though there is more volatility being priced into this earnings report, but relative to its performance over the past 12 months and in the year to date, trading on Micron remains bullish.
  • Investors are probably using options to gain exposure or protect recent gains. Micron shares have already gained 47 percent this year.
  • Micron remains attractive to Susquehanna largely because of its shift from a commodity-type company to a focus on storage for cloud infrastructure.

Bottom line: Volatility could rise after Micron reports earnings, but trading activity suggests investors remain bullish.

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