Micron Technology (MU)

[JLS]

MU Bull Call Spread,

I have a large number of MU shares and often sell CCs against those shares for extra income. I currently don't have any CCs written against those shares (but could enter them at any time independently of the new trade I'll explain below).

I decided to open new bullish MU options-only trades that will expire more than a week after earnings release. I entered two MU Bull Call Spreads (separate accounts) while I had a visitor yesterday morning. (He's a rock hound so was out looking for collector-quality rocks.)

Scheduled MU earnings date is Dec 19.

Bought a large number of MU Dec 29 '17 $46 Calls and sold the same number of MU Dec 29 '17 $49 Calls. Net Cost to enter trades of $0.48. Maximum profit (if unmodified) of $3.00. Reward:Risk Ratio of 6.25. (Never forget the value of calculating the value of that ratio.)

The cost of the trade (and also the R:R ratio) can be improved as earnings date approaches. That can be accomplished by trading out of (at a profit) and back into (at a later time) the Calls that were initially sold. In fact, that could be done a number of times in the coming days, thereby lowering the cost of the combo trade, and the Calls that are sold could even be at a higher strike than the initial strike thus resulting in a higher (profit) exit price.