Schaeffer's Trading Floor Blog

SanDisk Corporation (SNDK) Reversal Throws Bearish Traders for a Loop

SanDisk Corporation (SNDK) hit a 52-week low earlier, but has since reversed course

by 4/1/2015 2:57 PM
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It was a rough start for SanDisk Corporation (NASDAQ:SNDK), which hit a new annual low of $63 out of the gate, but has since climbed 2.7% to $65.31, amid unconfirmed rumors of possible interest from Intel Corporation (NASDAQ:INTC) -- which was already making M&A waves late last week. The reversal of fortune is likely stinging traders both in and out of the options pits, who have been betting on additional struggles for the storage device specialist.

Drilling down, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.04 ranks in the 67th annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip in recent weeks. Echoing this is SNDK's Schaeffer's put/call open interest ratio (SOIR) of 0.94, which rests higher than 86% of all similar readings taken in the past year. In other words, short-term speculators are more put-heavy than usual toward the shares.

Outside of the options pits, short interest rose 6.5% since early February, and now accounts for a healthy 7.7% of the stock's available float. Meanwhile, the brokerage bunch has been turning its back on the shares of late in the wake of the company's dreary forecast. However, 62% of analysts still maintain a "buy" or better rating on SNDK, and the stock's consensus 12-month price target of $81.03 stands at a 24% premium to current trading levels. In other words, should the security resume its technical struggles, there's still plenty of room for more bearish backlash.

On the charts, SanDisk Corporation (NASDAQ:SNDK) has been in a world of hurt since hitting its most recent high of $106.64 in early December -- due to two large bear gaps -- off 39%. With the stock's 14-day Relative Strength Index (RSI) docked at 23 heading into today's session -- signaling shares of SNDK were oversold -- a near-term bounce may have been in the cards.

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Analyst Update: Apple Inc., Esperion Therapeutics Inc, and United Continental Holdings, Inc.

Analysts adjusted their ratings on Apple Inc. (AAPL), Esperion Therapeutics Inc (ESPR), and United Continental Holdings Inc (UAL)

by 4/1/2015 12:26 PM
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Analysts are weighing in today on iPhone maker Apple Inc. (NASDAQ:AAPL), biopharmaceutical firm Esperion Therapeutics Inc (NASDAQ:ESPR), and airline concern United Continental Holdings Inc (NYSE:UAL). Here's a quick look at today's brokerage notes on AAPL, ESPR, and UAL.

  • AAPL is down 0.4% to $123.91, after Citigroup added the equity to its "U.S. Focus List" while underscoring its "buy" opinion. On the charts, Apple Inc. has experienced a slight pullback recently, with the shares down 7.3% from their Feb. 24 all-time high of $133.60. Sentiment in the options pits has been bearish, as AAPL's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.53 ranks higher than 77% of all equivalent readings from the past year. Meanwhile, the brokerage bunch is mostly bullish on the equity, as 79% of covering analysts rate it a "buy" or better, with no "sell" recommendations to be found.

  • UBS initiated coverage on ESPR with a "buy" rating and a lofty $140 price target, which represents a roughly 40% premium to the shares' current perch of $104.08. Although the shares are up 12.4% so far today -- and 156.6% year-to-date -- Esperion Therapeutics Inc is down 12.5% since hitting an all-time high of $118.95 on March 19. Short sellers have taken a shine to the stock, as short interest increased by 10.4% over the last reporting period. Presently, 13.1% of ESPR's available float is sold short, which would take roughly two and half sessions cover, at average trading volumes.

  • UAL is down 4.2% to $64.42, after Deutsche Bank downgraded the security to "hold" from "buy" -- while cutting its price target by $15 to $70 -- as part of a broader downward revision to its outlook for several airline stocks. Looking back, the shares of United Continental Holdings Inc have slipped recently, down 13.6% from their Jan. 26 all-time high of $74.52. Meanwhile, sentiment in the options pits has hit a pessimistic peak, as UAL's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.55 is the highest such reading taken over the past year. Despite today's negative note, most of the brokerage bunch has kept the faith; prior to the Deutsche Bank downgrade, 11 out of 13 covering analysts rated the stock a "strong buy."

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Earnings Preview: Micron Technology, Inc.

Analyzing recent option activity on Micron Technology, Inc. (MU)

by 4/1/2015 11:25 AM
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Micron Technology, Inc. (NASDAQ:MU) is up 0.2% to $27.17 this morning, as the firm prepares to release its fiscal second-quarter earnings report tonight after the close. Looking back, MU has been sliding, with the shares down roughly 25.7% since notching an almost 13-year high of $36.59 on Dec. 8. Accordingly, put buying has reached fever pitch in the equity's options pits.

MU's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.51 ranks higher than all equivalent readings taken over the past year, showing that puts have never been bought-to-open at a faster clip over this time frame. Echoing this indicator is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.62, which stands in the 63rd percentile of its annual range. Simply stated, short-term traders have rarely been this put-skewed over the past 12 months.

Looking elsewhere, the brokerage bunch has been mostly bullish on MU. Specifically, 82% of covering analysts have doled out "buy" or better ratings on the equity. Not to mention, MU's consensus 12-month price target of $41.20 is a lofty 51.6% premium to current trading levels -- and sits in territory not charted since August 2001.

However, speculators banking on post-earnings downside for Micron Technology, Inc. (NASDAQ:MU) are going against history. In the session immediately following its last eight earnings reports, MU has gained an average of 1.4%. Additionally, options traders have been paying historically fair prices for their near-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 49% rests in the 55th percentile of its annual range.

Daily Chart of MU Since October 2014

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Indiana Uproar: Wall Street Weighs In on RFRA

Apple Inc. (AAPL),, inc. (CRM), and Angie's List Inc (ANGI) are just a few corporations taking a stance on Indiana's Religious Freedom Restoration Act

by 4/1/2015 10:49 AM
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Indiana Governor Mike Pence passed a Religious Freedom Restoration Act (RFRA) last week, granting businesses legal recourse for refusing service to individuals on the basis of religious beliefs. While Pence and advocates of the bill insist it is designed to protect religious freedoms, and is not discriminatory in nature, that conviction is being countered by many corporations that are either located in the state or do business there. While a similar law in Arkansas was approved by lawmakers yesterday -- a move Wal-Mart Stores, Inc. (NYSE:WMT) is urging Governor Asa Hutchinson to veto -- here's a brief, but non-exhaustive, roundup of feedback given from those ranging from Apple Inc. (NASDAQ:AAPL) to NASCAR to the state of Connecticut.

  • AAPL CEO Tim Cook wrote an op-ed in The Washington Post detailing the company's opposition to Indiana's new law. Specifically, Cook wants to pass along the message that Apple is "in business to empower and enrich our customers' lives. We strive to do business in a way that is just and fair. That's why, on behalf of Apple, I'm standing up to oppose this new wave of legislation -- wherever it emerges Apple is open. Open to everyone, regardless of where they come from, what they look like, how they worship or who they love."

  •, inc. (NYSE:CRM) CEO Marc Benioff has been active on Twitter expressing his disdain for the new Indiana law, including suspending all corporate events scheduled in the state:

  • Indianapolis-based Angie's List Inc (NASDAQ:ANGI) has canceled plans for a $40 million expansion in the city, which was projected to create roughly 1,000 jobs. As CEO Bill Oesterle said, "We believe that what that bill does to our efforts to recruit good talent into Indiana is significant. We're unwilling to engage in an economic development agreement that is contingent on us hiring people in when [sic] the state is sending a message out to potential employees that is not always palatable."

  • Elsewhere, Gap Inc (NYSE:GPS), Yelp Inc (NYSE:YELP), and Eli Lilly and Co (NYSE:LLY) are among many other publicly traded companies weighing in on the controversial legislation.

  • In the sports world, Indianapolis is home to the NCAA. The organization will host the 2015 Men's Final Four this weekend. With respect to holding future events in the city, NCAA President Mark Emmert said, "We're going to have to sit down and make judgments about whether or not (the RFRA) changes the environment for us doing our work, and us holding events. We're deeply committed to the whole notion of inclusion. We have a very diverse membership. We value that very, very highly. We've got to work in and we've got to host our events in an environment that makes that possible."

  • Meanwhile, NASCAR -- which is slated to hold its annual Indianapolis 500 race on Sunday, May 24 -- expressed its concern with RFRA. "We are committed to diversity and inclusion within our sport and therefore will continue to welcome all competitors and fans at our events in the state of Indiana and anywhere else we race."

  • Finally, many city governments throughout the U.S. are also reacting to Indiana's new law. Specifically, mayors in Denver, Portland, Oregon, San Francisco, and Seattle have all blocked official travel to the state. Additionally, Connecticut Governor Dan Malloy and New York Governor Andrew Cuomo banned state-funded travel via an executive order.

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Organovo Holdings, Inc. (ONVO) 3-D Kidney Data a Boon to Option Bulls

Organovo Holdings Inc (ONVO) is soaring on 3-D kidney data

by 4/1/2015 9:39 AM
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Organovo Holdings Inc (NYSEMKT:ONVO) is surging this morning, after the firm gave a presentation on the fully cellular 3-D bioprinted kidney tissue it's developed -- an industry first -- at the 2015 Experimental Biology Conference. Specifically, the shares are up more than 10% out of the gate to trade at $3.90 -- though they remain 46% lower year-to-date. Today's upward gap may be music to the ears of recent options traders.

During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open more than 10 ONVO calls for every put. The resultant 10-day call/put volume ratio of 10.11 outranks 65% of comparable readings from the past year, indicating calls have been bought to open over puts at an accelerated clip in recent weeks.

However, it's worth noting that nearly 23% of Organovo Holdings Inc's (NYSEMKT:ONVO) float is dedicated to short interest. This amounts to roughly two weeks of trading, at the biotech stock's typical daily levels. Therefore, it's possible some of the calls (especially at out-of-the-money strikes) were bought to open by short sellers to hedge against an unexpected rally -- like the one we're seeing today.

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