WDC — Deep ITM Call Buying Ahead of Earnings

Western Digital (WDC) has been one of the stronger names in the storage and semiconductor space this quarter, riding the AI-driven demand for high-capacity memory and data infrastructure. The company reports earnings this Thursday, and traders seem to be positioning early — but not with speculative short-term calls. On 10/28/25, we saw a wave of deep in-the-money call buying that looked more like stock replacement than a high-risk earnings bet.

The Options Flow

The flow on 10/28/25 stood out not just for its size, but for its structure. These weren’t cheap, short-dated calls — they were deep ITM with significant premium paid, suggesting traders may be swapping out common stock for calls to manage exposure ahead of earnings. That’s a classic institutional move when confidence in upside remains but short-term volatility risk is high. The activity was consistent and directional, pointing to continued optimism into the report.

Source: blackboxstocks.com

Technical Setup

On the 4-hour chart, WDC has been consolidating nicely, holding above the 89 EMA after reclaiming it earlier this month. That’s a key level I watch for trend continuation. As long as the stock stays above that support, the broader uptrend remains intact. Momentum has cooled slightly, which makes sense ahead of earnings, but the structure looks healthy and balanced.

The Trade

Given the deep ITM nature of the flow and the proximity to earnings, this looks more like stock replacement than a short-term trade. That’s why I’d lean toward playing commons rather than options here. With implied volatility elevated going into the report, any post-earnings pullback — even on good numbers — could trigger a sharp IV crush. Commons offer a cleaner way to participate in the trend without taking on premium decay risk.

Disclaimer: This post is for informational and educational purposes only. Nothing here should be considered financial advice or a recommendation to buy or sell any security. Always do your own research and trade based on your own risk tolerance and strategy.