Micron's Share Price Rally Boosts Appeal of $115 Call Options as Earnings Beat

More than 102,000 call options with the $115 strike price changed hands as of 1:21 p.m. in New York across 20 expiration dates, data tracked by moomoo showed. That's the most for any strike price for call and put options in contracts stretching through Jan. 15, 2027.

The stock climbed as much as 20% to $114 shortly after the market opened Thursday. The rally came after the maker of computer memory chips forecast a brighter outlook than analysts expected and reported revenue and earnings that surpassed Wall Street consensus. The results were buoyed by increasing demand for products that power artificial intelligence applications.

“Micron delivered 93% year-over-year revenue growth in fiscal Q4, as robust AI demand drove a strong ramp of our data center DRAM products and our industry-leading high bandwidth memory," Micron Technology President and CEO Sanjay Mehrotra said in the company's earnings results released after the market closed Wednesday. "We forecast record revenue in fiscal Q1 and a substantial revenue record with significantly improved profitability in fiscal 2025.”

The earlier surge in stock price put the $115 call options closer to being in-the-money before they expire and sending the contract price up to as high as $2.19. As the rally weakened, buyers pulled back, sending the contract price down 64% to 16 cents. That volatility took the volume to 35,640, almost six times the open interest. The $115 calls expiring in the next few weeks are faring better, up more than 50%.

Revenue in the fiscal fourth quarter that ended Aug. 29 reached $7.75 billion, beating the $7.655 billion expected by analysts, according to estimates compiled by Bloomberg. In the first quarter of fiscal year 2025, the company said it expects revenue of about $8.7 billion, plus or minus $200 million. That's higher than the average estimate of $8.32 billion, according to Bloomberg.

Adjusted earnings per share could reach $1.66 to $1.82 in that fiscal first quarter, higher than the average estimate of $1.52.

Thursday's rally took Micron shares above the upper line of the Bollinger Band, a sign to some who study charts that the stock could be oversold, and the trend may turn bearish. Nine other technical indicators are flashing warning signals, while four are neutral and one is still positive.

Shares are likely to outperform through the rest of the year, as the outlook provided by the company reflected improving shipment and a recovery in traditional demand from servers, enterprise and cloud, Blooomberg quoted JPMorgan analyst Harlan Sur as saying. The analyst has a price target of $180 for the stock, higher than the average price target of $149.68.

Do you agree with the technical indicators, or do you share JPMorgan's view? Share your thoughts in the comments section. And if you have a price forecast, please vote below.