Micron Technology reported strong earnings for the first quarter of its fiscal year, causing its stock price to jump by 13%. So far this year, Micron’s stock has risen by 202%, even as many AI stocks have struggled. This growth is due to its solid valuation metrics, with low P/E and PEG ratios indicating further growth potential. The company reported record revenue of $13.64 billion for the quarter ending November 27, up 56% from last year and surpassing expectations. Its net income reached $5.2 billion, reflecting a remarkable 175% year-over-year increase. Micron’s gross margin increased to 56%, a rise from 38.4% last year. A significant driver of this growth was its cloud memory unit, which saw revenue skyrocket by 99% to $5.3 billion. This unit supplies AI memory chips to major companies like Microsoft, Amazon, and Google. For the second fiscal quarter, Micron anticipates revenue of $18.7 billion, a 37% increase from Q1. The gross margin is expected to rise to 66%, with earnings projected at $8.19 per share. Micron credits its success to technological leadership, a wide range of products, and effective operations. After the strong 13% increase in stock price following earnings, implied volatility in Micron options has likely dropped. This situation offers a cleaner opportunity for trades over the next few weeks without the high costs typical before earnings reports. It’s an excellent time to consider bullish trades based on the company’s impressive future outlook. Given the expected 37% revenue growth next quarter, purchasing call options set to expire in February or March 2026 could be a smart move. This would allow time for the market to fully absorb the expected earnings potential indicated by the $8.19 EPS target. Longer-dated options help avoid rapid time decay and still capture the anticipated upward movement. For those with a more cautious perspective, selling cash-secured puts at strike prices below the current market level is another appealing strategy. With a forward P/E of just 11, we believe there is solid support for Micron’s valuation, making it a strong trade for collecting premium. Alternatively, a bull call spread can limit risks while still taking advantage of the clear upward trend. Recent industry data support this positive outlook, showing that the high-bandwidth memory (HBM) market is projected to grow by over 150% by 2026. Data center construction, crucial for cloud memory, is also on the rise, with spending increasing nearly 20% year-over-year, according to the latest reports from November 2025. This reinforces that the demand Micron is experiencing is part of a larger, sustainable trend. We have seen similar cycles before, especially during the semiconductor boom of 2020-2021, when strong demand led to significant and sustained stock price increases. While the semiconductor index (SOX) has risen by 65% this year, Micron’s 202% increase clearly sets it apart as a leader. History shows that leaders often continue to outperform their peers for several quarters. As we approach the end of the year, trading volume may decrease during the holidays, potentially leading to price stability or a gradual upward trend. This environment is suited for strategies that profit from time decay, such as selling puts or covered calls. However, given the strong growth forecast, caution is advised against limiting upside potential with covered calls unless the premium is exceptionally appealing.

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