Bearish Bets Are Stacking Up on SanDisk Corporation

SanDisk Corporation (SNDK) scored heavy put volume on Friday in the wake of downbeat earnings from tech-sector peer Dell (DELL). Volume ramped up to 123% the expected level, with roughly 11,000 put contracts crossing the tape. During the course of the session, speculators on the International Securities Exchange (ISE) bought to open 2,396 puts and 385 calls on the chip concern.

As a result, SNDK now sports a 10-day ISE put/call volume ratio of 2.79, as puts bought to open have nearly tripled calls during the past two weeks. This ratio ranks higher than 99.2% of other such readings taken within the previous year, indicating that option players have rarely shown a greater preference for bearish bets over their bullish counterparts.

A closer look at Friday's volume reveals that some of the put activity was linked with a spread strategy, or a potential rollout. Shortly after midday, one trader sold a block of 1,803 November 21 puts, and simultaneously purchased a block of 1,803 December 22 puts. With November-dated options expiring at the close of last Friday's session, it's possible that this speculator was rolling his bearish position up and out to the next expiration month.

Elsewhere on Wall Street, short sellers have also been betting against SNDK. During the most recent reporting period, short interest jumped by 14.1%, and now accounts for 4.7% of the equity's available float.

Despite the rising bearish tide among investors, SNDK is actually faring quite well on the charts. The shares have recently been consolidating their gains between the $20 and $25 levels, but they're perched on key support from their 20-week moving average. This trendline has helped guide the stock to a gain of 110.8% year-to-date.

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