SanDisk (NASDAQ: SNDK - option chain) shares are headed higher today after reporting a first-quarter loss of $208 million, or 92 cents per share. SNDK's adjusted loss of 48 cents per share was not as bad as the 76-cent loss forecast by analysts. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SNDK.SNDK opened this morning at $14.86. So far today the stock has hit a low of $14.69 and at 11:30 is trading at the intraday high of $15.68, up 1.97 (14.4%). The chart for SNDK looks neutral and S&P gives SNDK a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $13 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.7% return in just month as long as SNDK is above $13 at May expiration. SanDisk would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
SNDK has shown support around $13.50 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in SNDK.
SNDK has shown support around $13.50 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in SNDK.
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