SanDisk (SNDK) 11/12/09 PriceWatch Alert Targets 19.21% Return

Posted: Thursday, November 12, 2009 8:11 AM EDT
By: Market Intelligence Center Staff

SanDisk (NasdaqNM: SNDK) closed yesterday at $21.31. 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 20.78 and resistance in the 22.26 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 $15.71 area. That is also the break even stock price for this trade. This covered call has a 156 day duration, provides 26.28% downside protection and an 8.21% assigned return rate for a 19.21% 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 17 call (SWQ DI) for an $11.35 debit. The trade has a 156 day life and would provide 23.28% downside protection and a 5.73% assigned return rate for a 13.00% annualized return rate (for comparison purposes only). SanDisk does not pay dividends at this time. [THA-Seven Summits Research]