NaughtyPines

THE WEEK AHEAD: MU, OIH, EWZ, XOP, GDXJ

NASDAQ:MU   MICRON TECHNOLOGY INC
The only earnings play coming up next week that currently interests me from a premium selling/volatility contraction standpoint is MU -- with a background implied volatility in the 60's -- which announces earnings on Thursday after market close. Neither ORCL nor FDX -- which announce Monday and Tuesday respectively -- have sub-30 implied volatility , although they're probably worth watching to see if their implied's bump up closer to the announcement or, depending on price movement post announcement, whether there is an opportunity to take advantage of earnings announcement "afterglow."

Preliminarily, the MU March 29th 20 delta 55/69 is paying 1.89/contract (off hours) with break evens at 53.11/70.89. The defined risk iron condor would require slightly more aggressive strikes to get one-third the width out of the longs -- the 53.5/56.5/67.5/69.5 (30 delta) in the March 29th pays 1.03 with break evens at 55.47 and 68.53.

For short put/acquire/cover cycle traders who are looking to potentially get into MU lower than current market prices, the April 20th 25 delta 55 short put is paying 1.88 at the mid, yielding a break even of 53.14, a 12.28% discount over where the underlying is currently trading. Alternatively, you can look at going out to May here where the 55 is at the 30 delta, bring in 2.87 at the door and get a break even of 52.13 (a nearly 14% discount).

As far as non-earnings is concerned, we're kind of in "the dead zone" between the April and May monthlies; for me, the April month is too short in duration (33 days to go) and the May, a bit too long (61 days).

Nevertheless, here are the top four exchange-traded funds ranked by implied volatility -- OIH (29), EWZ (29), XOP (29), GDXJ (28) -- and by implied volatility rank/percentile: XHB , FXI , XLF , and XLB , all of which are at the upper end of their 52-week ranges. Unfortunately, that isn't saying much, since background implied in all of these is sub-25, with the preferred metric for background implied being >35%.

It may be time to scrounge around for something directional to keep me engaged in "the dead zone" -- for example, this GE play (See Post below) ... .
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