SNDK – SanDisk Corporation – Options traders with long-term bullish views on SanDisk Corp. sold in- and out-of-the-money put options in the October and January 2011 contracts this morning with shares of the underlying stock rallying 3.00% to $42.71 by 11:40 am (ET). Investors expecting SanDisk’s shares to continue to climb in the next several months sold 1,000 puts at the October $42 strike to pocket an average premium of $5.025 apiece. Put sellers keep the full premium received today as long as the price of SanDisk’s shares exceeds $42.00 through October expiration day. Optimism spread to the higher October $43 strike where 1,000 in-the-money puts were sold at a premium of $5.50 each. Investors short the October $43 strike puts walk away with the full premium pocketed today if shares are trading above $43.00 ahead of expiration. Another optimistic options player anticipating sharp share price appreciation for SanDisk sold 1,200 deep in-the-money puts at the January 2011 $47 strike to take in a premium of $9.75 per contract. The trader responsible for this transaction keeps the full premium received if SNDK’s shares rally at least 10.00% to trade above $47.00 by expiration day in January 2011. Investors short the puts are apparently happy to have shares of the underlying stock put to them should the puts land in-the-money by expiration day. Traders selling the October $42 and October $43 strike puts could have shares put to them at $36.975 and $37.50, respectively, while the investor selling the January 2011 $47 strike puts may have shares put to him at an effective price of $37.25 each.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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