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Luke Kawa

JPMorgan recommends bullish options bet on Micron ahead of earnings

JPMorgan equity derivatives strategists led by Bram Kaplan think Micron is poised to jump after it reports earnings on Tuesday after the close — but not by too too much.

Micron has had an exceptionally hot run lately. Before Friday’s drop, shares of the memory chip specialist enjoyed a record-winning streak buoyed by a bevy of positive news on AI data center spending.

Kaplan says options that encompass the reaction to Micron’s earnings look expensive, as they currently imply a move of plus or minus 9.6% versus an average absolute change of 7.4% over the past three years. And with such an explosive advance over the past few weeks, he reckons the odds of an outsized surge on earnings are not high.

“The company’s pre-announcement should partially de-risk the earnings print, which, along with our analyst’s $185 price target (~14% upside), gives us comfort selling deep upside, leading us to favor call ratios to position into earnings,” he wrote.

JPMorgan’s recommendation:

  • Buy one call option on Micron that expires this Friday with a strike price of $170, and

  • Sell two call options on Micron that expire this Friday with a strike price of $180.

This trade doesn’t cost anything in terms of premium; you actually get paid for putting it on. The potential downside is that significant losses could result in the event the stock goes parabolic this week.

The sell side anticipates that Micron will deliver adjusted diluted earnings per share of $2.84 on sales of $11.15 billion and adjusted gross margins of 44.5% in its fiscal fourth-quarter results on Tuesday, per analysts surveyed by Bloomberg.

JPM’s semiconductor analysts think that earnings and margins will exceed expectations, and guidance for the current quarter will also surprise to the upside. Commentary around margins, supply commitments, and the balance of supply and demand for high-bandwidth memory chips next year will likely be the key factors that drive the stock amid the release of earnings and the quarterly conference call, in their view.

“Given materially higher high bandwidth memory content for XPUs/GPUs shipped in calendar year 2026 vs. calendar year 2025, and likely upside to current XPU/GPU unit growth expectations for CY26 against a backdrop of rising hyperscaler capex budgets, our analysts see little risk of oversupply next year,” Kaplan wrote.

Kaplan’s got a hot hand when it comes to trade calls on semiconductor earnings: in early September, his bullish options recommendation on Broadcom ahead of its quarterly report delivered a return in excess of 450% after the AI chip designer unveiled a major new customer later reported to be OpenAI.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

  • Revenue of $11.0 billion (estimate: $10.8 billion).

  • Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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