SanDisk Corp. (SNDK) provides flash storage solutions, designs, develops and manufactures data storage solutions in a variety of forms using flash memory, controller, firmware and software technologies. The stock is currently trading around $54.27 at the lower end of its 52 week range of $53.18-$106.64. The stock has been under performing the market this year dropping an appalling 44.65% year to date. SNDK is scheduled to report earnings after the closing bell today, and the stock is down $1.31 or 2.36% on the session ahead of the close.
Over the past 12 quarters SNDK has rallied on earnings day 7 times with an average move of 5.39%. The stock appears bearish on a chart going into the release having traded below and in the Ichimoku Cloud since for a few months since March on the daily bars. Over the past 12 quarters SNDK has rallied from earnings to the nearest options expiration 6 times with an average move of 6.16%. The stock price has not ripped to the upside for the past 4 quarters. Investors are expecting to see how the company performs having seen decline in PC shipment worldwide by 9.5%. With negative growth, bearish technical analysis, and poor earnings performance in the past 4 quarters it is hard to justify anything, but a short position in SNDK.
The options market is currently implying a move of around $4.44 or 8.2% in SNDK by this Friday’s close giving us targets of $49.83 and $58.71.
Possible Trade: Buy this week’s 51-49 Put Vertical Spread for $0.43
Risk: $43 per lot
Reward: $157 per lot
Break Even: $50.57