SanDisk (SNDK) 11/16/09 PriceWatch Alert Bullish Price Movement

Posted: Monday, November 16, 2009 8:19 AM EDT
By: Market Intelligence Center Staff

SanDisk (NasdaqNM: SNDK) ended the last trading session at $21.95. 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 21.08 and resistance in the 22.38 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 18 covered call (SWQ DJ) for a net debit in the $16.80 area. That is also the break even stock price for this trade. This covered call has a 152 day duration, provides 23.46% downside protection and a 7.14% assigned return rate for a 17.15% 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 18 call (SWQ DJ) for an $11.85 debit. The trade has a 152 day life and would provide 23.23% downside protection and a 9.70% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). SanDisk does not pay dividends at this time. [ABR-Seven Summits Research]