Key insights
- The article discusses potential trading strategies for memory stocks, specifically Micron Technology (MU), ahead of its earnings report. The author explores options like OTM LEAPS, ATM LEAPS, and leveraged ETFs, considering the parabolic nature of recent stock movements and the potential for stellar earnings. This focus on a key technology sub-sector and its earnings outlook suggests a potential near-term positive catalyst for related equities, though the author also acknowledges the risks associated with leveraged products and the timing of such trades.
How are you approaching MU earnings on Wednesday and the following momentum on all the remaining memory stocks, assuming all the stocks move higher? I was holding some OTM LEAPS on MU and DRAM starting from April, but I realized I’d be better off if I simply bought shares back in January - wishful thinking. I’m not sure how much more of a parabolic potential do all these memory stocks have left but I wanted to get your opinion on how you approach such parabolic moves, assuming MU beats on all fronts on Wednesday - just like SNDK did in April.
I could either buy ATM LEAPS or 2x leveraged ETFs on MU and SNDK. I know that with the leveraged ETFs, the daily reset creates a compounding effect that can either work against me or for me, depending on how the underlying stock behaves over a multi-day period. So I’d only buy leveraged ETFs if the earnings are stellar.
How do you decide between leveraged ETFs vs ATM calls 6-9 months out in such cases?