SanDisk Reversal Throws Bearish Traders for a Loop

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

Apr 1, 2015 at 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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