The white whale. Every once in a while comes a name that ticks me off, and I just do not give up on it. A flaw in my discipline? I like to think of it as tenacity, but you may be right. General Electric (GE - Get Report) , and Apache (APA - Get Report) have been names that have forced upon me hardship in the past. In both of those instances, I ended up turning profits due to the wonders of net basis management over a longer time frame than was likely worthwhile. I'm human. Micron (MU - Get Report) has become my latest beast in need of taming. This beauty is off a rough 15% in December alone. The name closed last night at $33.88. My net basis in $36.08. Suddenly, I am on the wrong side of the ledger. I have written positively on this name several times. I write honestly about my own trading, and if I have led you down a dark alley, then I beg your forgiveness. That said, when I find myself in a dark place, I usually find my way out of said dark alley. Follow if you want to. I am not telling you good folks to do anything. This is the story of a less than sane sea captain, and a white whale.

Micron reports their fiscal first quarter results tonight. Wall Street consensus view is for EPS of $2.96 with whispers maybe for a penny less than that. Revenue is expected to print just above $8 billion. That should be good, if realized for year over year growth of 17.9%. What do I think? I think that even with these impressive numbers probably already priced in, the shares closed last night awfully close to 52 week lows, and trade at a forward looking PE with a 3 handle. Briefly, that means that this name is grossly undervalued, or those projected earnings are wrong. There is no middle ground here. Last week, Citigroup cut estimates for MU based on lower average selling prices for both DRAM and NAND memory based on oversupply.

Still, the stock has an ally in Bank of America Merrill Lynch's Simon Woo. Woo still has a buy rating on MU, and a price target of $55, of course at least partially based on the firm's aggressive corporate repurchase program. My two cents? My belief is that the quarter being reported might not hardly matter at all. Market reaction, in my opinion will be centered around CEO Sanjay Mehrotra's guidance into and beyond the second quarter. Investors will need to be told how well the firm is countering the decline particularly in DRAM pricing as that is this firm's bread and butter. Wall Street is looking for revenue of roughly $2.44 for that quarter (reported in February). Let's say, Mehrotra can guide into the mid-$2.50's? Then I think we have a ball game. One more thing, as an Apple (AAPL - Get Report) supplier, some of this stock's good fortunes are tied up in Apple hardware sales, which for the time being appear troubled.

Should the stock price approach the central trend line of this Pitchfork model ahead of earnings, I will be likely to add. If not, I'll wait until I hear the call tonight. None of the day to day indicators (RSI, MACD, Money Flow) are friendly right now, but I did not expect that they would be given MU's "December to Remember" performance so far.

Pre-Earnings Trade Idea (minimal lots)

My trades will be somewhat different, due to the fact that I am already long the equity as well as short both puts and calls. Still my general idea is to maintain a long position, while reducing net basis through the use of the options market.

-Purchase 100 shares of MU (last: $33.88)

-Sell (write) one Dec 21 (this Friday) MU $31.50 put (last: $0.64)

-Sell (write) one Dec 21 (this Friday) MU $36 call (last: $0.65)

Notes: This trader through the sale of this options strategy has reduced net basis to $32.59. A trader could push out expiration to further reduce net basis. Below $31.50 the trader is at increased equity risk at an obviously lower basis. Profit on the trade through this Friday is capped at $3.41 (or 10.5%) should the shares trade above $36 on that night's close.

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(An earlier version of this column appeared at 8:46 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Stephen "Sarge" Guilfoyle, Jim Cramer and other experts throughout the market day.)

At the time of publication, Stephen Guilfoyle was Long AAPL, MU equity. Short MU calls. Short GE, MU puts.