Here’s Why I’m Selling Micron Before Earnings. It’s a Matter of Risk Control, Not Lack of Conviction.

As Micron (MU) tumbled on the semiconductor selloff triggered in part by news coming out of South Korea, investors contemplated whether to take profit before today's earnings. The earnings come out later today and will be an eagerly awaited event, especially in the context of what happened in South Korea yesterday. The Korea Composite Stock Price Index ($KSIC) crashed on rumors that memory demand may be slowing down. The index had already nearly doubled year-to-date (YTD) and with extremely high leverage, this was bound to happen sooner or later.

The problem for Micron investors is that this happened a day before the earnings release, not an ideal time for someone betting on an earnings beat. If you’re one of those, you’re not only down on your investment but staring at massive volatility post-earnings. Data from Barchart’s Micron Option Prices suggests an extreme move either side of the stock price.