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Bulls and Bears Take Sides on SanDisk

July-dated options on SNDK were trading at a rapid clip on Tuesday

by 5/30/2012 11:04 AM
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Options were unusually active on SanDisk Corporation (SNDK - 33.51) during Tuesday's post-holiday session, with approximately 25,000 calls and 23,000 puts changing hands. This flurry of activity represented more than double SNDK's average daily option volume of about 21,000 contracts.

Most active were the July 32 put, where 2,562 contracts traded, and the July 35 call, where 2,273 contracts crossed the tape. The majority of these options were exchanged closer to the ask price, and open interest rose at both strikes overnight -- suggesting that bulls and bears alike were placing new speculative bets on SNDK.

As a result of Tuesday's trading, total near-term call open interest for SNDK increased by 3.5% to 92,873 contracts. Comparable put open interest was up about 4% to 94,757. The equity's Schaeffer's put/call open interest ratio (SOIR) now stands at 1.02, which ranks higher than 75% of other such readings taken during the past 52 weeks. In other words, short-term options players have been more put-heavy only 25% of the time over the previous year.

SNDK has fallen on some hard times, technically speaking, with the shares sitting on a steep year-to-date loss of about 30%. Since late March, the stock's swoon has been highlighted by double-barreled resistance at its 10-day and 20-day moving averages. However, SNDK has lately been testing its footing in the $32-$34 neighborhood, which has provided a consistent floor for the shares since May 2010.

Daily Chart of SNDK since March 2012 With 10-Day and 20-Day Moving Averages


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