SanDisk (SNDK) 11/11/09 PriceWatch Alert At $15.72 Break Even

Posted: Wednesday, November 11, 2009 8:08 AM EDT
By: Market Intelligence Center Staff

SanDisk (NasdaqNM: SNDK) closed yesterday at $21.32. So far the stock has hit a 52-week low of $5.07 and 52-week high of $24.61. SanDisk stock has been showing support around 20.89 and resistance in the 22.03 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 17 covered call (SWQ DI) for a net debit in the $15.72 area. That is also the break even stock price for this trade. This covered call has a 157 day duration, provides 26.27% downside protection and an 8.14% assigned return rate for an 18.93% 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 7.50 Call (OWS AU) and selling the Apr '10 17 call (SWQ DI) for a $9.00 debit. The trade has a 157 day life and would provide 22.61% downside protection and a 5.56% assigned return rate for a 13.00% annualized return rate (for comparison purposes only). SanDisk does not pay dividends at this time. [WBA-Seven Summits Research]