Options Trading News

January 15, 2013  Tue 9:12 AM CT

A large call spread tops today's option trade in SanDisk as shares are up against a resistance level in place for the last nine months.

A trader bought 5,000 February 49 calls for $1.28 and sold the same number of February 50 calls for $0.96, below the listed bid price at the time, according to optionMONSTER's Heat Seeker system. The volume at each strike is more than twice the previous open interest, so this was a new position.

The call vertical spread cost $0.32 to open, which is the most that can be lost in the trade. The maximum gain of $0.68 would be realized if SNDK is above $50 at the February expiration. (See our Education section)

SNDK is down 1.04 percent to $46.51 this morning, but shares finished yesterday at their highest close since gapping down from $50 at the start of April 2012. This trade sees the memory-chip maker filling that gap over the coming weeks.
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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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