SanDisk (SNDK) 10/26/09 PriceWatch Alert Bullish Price Movement

Posted: Monday, October 26, 2009 8:44 AM EDT
By: Market Intelligence Center Staff

SanDisk (NasdaqNM: SNDK) ended the last trading session at $22.12. So far the stock has hit a 52-week low of $5.07 and 52-week high of $24.25. SanDisk stock has been showing support around 21.25 and resistance in the 23.71 range. Technical indicators for the stock are Bullish and S&P gives SNDK a neutral 3 STAR (out of 5) hold rating. SNDK appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at an Apr '10 19 covered call (SWQ DS) for a net debit in the $17.17 area. That is also the break even stock price for this trade. This covered call has a 173 day duration, provides 22.38% downside protection and a 10.66% assigned return rate for a 22.49% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the SNDK Jan '11 5 Call (OWS AA) and selling the Apr '10 19 call (SWQ DS) for a $13.10 debit. The trade has a 173 day life and would provide 18.17% downside protection and a 6.87% assigned return rate for a 14.00% annualized return rate (for comparison purposes only). SanDisk does not pay dividends at this time. [ABR-Seven Summits Research]