r/options
MU is pricing in some insanely abnormal panic
MU options show extreme 100% IV pricing in massive panic, signaling either an AI market crash or a volatility bubble pop.
- The extreme IV premium presents a lucrative opportunity for volatility sellers if the expected panic doesn't materialize.
- Institutional hedging and market maker IV expansion might be artificially inflating the panic, creating a volatility bubble.
- MU is a critical bottleneck for the AI industry; any weak guidance could trigger a 40% crash across the entire AI sector.
- Market makers are terrified of gap risk and refusing to sell insurance, indicating severe underlying fear of a massive downside.
MU October IV is sitting at over 100% IV for contracts 40% OTM (This is insane by the way)
NVIDA in 2023 was the last time this happened on their massive guidance from my research, Meme stocks being another
This is a MASSIVE premium on insurance this far out in term, and a volatility bubble goldmine
this also says a couple things:
\- MU is the bottleneck of the entire AI industry, if MU says demand is slowing, AI could be down 40% as a whole, hence the risk premium demanded from the 100% IV so far out
\- OR Its massive institutional hedging and MM IV expansion
\- AND MMs are terrified of gap risk, they dont want to sell any more insurance, they just boost the IV
This is MASSIVE panic, like unheard of type of panic
$7 wide spreads in October are also a tell tale sign of MMs dont know wtf is going to happen
This earnings is going to be BIG, really big, like crash the AI market on bad guidance big, or a massive volatility bubble waiting to be popped
Stock is up 917% since 8/1/25. Time for 40% pullback.
The company is trading at about 10x Forwad P/E with growth. Unless pricing shows actual signs of eroding, a 40% drop to a forward P/E of 6 doesn't seem likely.
Unless that forward PE isn't realised since it's all an estimate on guidance etc.
They are essentially on contract for most of 2027. I don't know what happens 2-3 years from now, but bet against these companies at your own peril in the next 18 months.
People say this but then also fail to realise all those estimates have been FAR too low implying the real forward PE is even lower. Theres two sides to this coin.
The thing about AI is none of the MU’s or NVDA’s are going to ever say it’s slowing down … Just look at SpaceX pricing in interplanetary travel to Mars … Meanwhile FSD isn’t even 100% yet lol … future values are concerning but they’ll keep inflating them
Yes; I can’t believe I’m the only one seeing this too. No one is going to stay oh slowdown coming; sell the shares
I’m sure there will come a time when someone says it because it will be too obvious by their earnings. This isn’t the time. People think this bubble is about to pop, but it’s not. For many companies it’s just getting started
I will say the bubble talk is healthy for the markets overall because it slows the bubble from forming too fast. And we have these mini pops that aren’t catastrophic.
It gets dangerous when everyone is onboard and there’s no talk of bubbles.
Claude always freaks the fuck out at high IV. Probably Claude.
Lol. After all the sh\*t OP gave me last week on my (100% correct BTW) EA trade on $ADBE, with all his claims about how brilliant and options trader he is, pretty much smarter than anyone else, this is the best he can do??!! WTF kind of drivel is this? Ewww - IV is high and the market is going to move big or vol will be crushed!!
So my big shot, instead of stating the obvious, what don't you bless us with your brilliant trading acumen and tell us your trade that will make us all rich??!!🤡
You have serious balls.
Bold.
I don't think there's any amount of forward guidance that will justify the recent move. They don't have enough supply to offer. I think it will sell off AH, but then the dip will get bought up all the rest of the week. So dip then rip.
Are you going to time the drop with one of the few AI companies that is massively FCF positive?