Options Trading News

April 8, 2013  Mon 9:50 AM CT

As SanDisk pushes higher this morning, one trader is apparently looking for the stock to make a sharp move higher or lower.

A trader bought 2,550 July 62.50 calls for the ask price of $1.27, optionMONSTER systems show. The volume was 5 times the strike's open interest before the session began, clearly indicating new activity.

About 90 seconds later the biggest SNDK stock trade went off, with 61,200 shares sold for $54.9017. The combination of stock and option activity creates an overall position that is delta-neutral and therefore focused on higher volatility as opposed to the stock's direction.

The trader is looking for shares of the memory-chip maker to make a big move one way or the other and/or for the actual volatility to be greater than that implied by the option price. (See our Education section)

SNDK is up 0.85 percent to $55.23 today. That would be the stock's best close in more than five years, though shares were higher intraday on a number of occasions the previous two weeks.
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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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