💾 MICRON TECHNOLOGY: DERIVATIVES TRADING 💾

💾 MICRON TECHNOLOGY: DERIVATIVES TRADING 💾

Micron Technology [MU] designs, manufactures, and sells computer memory and data storage products. Their core products are:
• DRAM (Dynamic Random-Access Memory): Fast working memory used in PCs, servers, and smartphones.
• NAND Flash Memory: Long-term data storage used in solid-state drives (SSDs) and mobile devices.
• High Bandwidth Memory (HBM): Ultra-fast memory tightly integrated with AI processors to train large artificial intelligence models.
• NOR Flash: Specialized memory used in automotive and industrial systems

Margins LTM [03/10/26]:
- Gross margin: ≈ 80.7%
- Operating margin: ≈ 78.1%
- EBITDA margin: ≈ 81.7%
- Net margin: ≈ 63.8%
- ROIC: ≈ 90.5%
- Debt Net / EBITDA: ≈ -0.4x

Insights:
- P/S ratio near to 9x, currently it is in line with the average
- EV/EBITDA ratio near to 10x, slightly lower from the median 
- PER ratio near to 15x, currently it is in line with the average 
- Excessive FCF growth over the last two years
- Excessive increases in EPS growth YoY
- Acceptable, strong and powerful margins and ROIC

Based on its last EPS [03/10/26 TTM] of ≈ $75.3 USD and a 14x Forward PER and a sensibility of ± 0.7909x annual, a hypothetical spread could be (ceteris paribus):
- High: ≈ $ 1,776.3 USD
- Neutral: ≈ $ 1,054.2 USD
- Down: ≈ $ 766.7 USD

Hypothesis

MU in the next >12 (perhaps 16) months, might have a strong distribution phase above ≈ $1,415 USD and a strong accumulation phase below ≈ $766 USD where there is a neutral-bearish bias due to its revaluation probabilities and other quantitative parameters
:::> It could be a high risk to take

Hedge plan example:
- Call [sell]: $1,550 USD
- Call [sell]: $1,250 USD
- Put [buy]: $766 USD
- Put [sell]: $600 USD
- Put [sell]: $400 USD

Risks
- Prices higher than $1,250 for a long time
- Prices lower than $600 for a long time.
- The neutral price of ≈ $975 is not reached at expiration
- Roll over costs (if time is not well estimated)
- Not revaluation of strategy each 3 months


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J. Joel Padilla
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