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November 1, 2012  Thu 10:36 AM CT

SNDK: SEE CHART GET CHAIN FIND STRATEGIES
One trader is betting that potential upside is limited for SanDisk even as the stock rallies today.

optionMONSTER's tracking systems show that a trader sold 4,554 December 45 calls for $1.32. The volume is well above open interest of 1,722 contracts at the start of the session, clearly indicating new activity.

SNDK is up 4.98 percent to $43.86, a day after its lowest close since the start of September. Shares of the memory-chip maker have been trending lower since trading above $46 later that month.

Today's call seller apparently believes that SNDK won't see rise much beyond the $45 strike price by expiration in December. Those options could have been sold naked with an initial bearish bias, or they could have been traded against an existing long position in the stock in a covered call strategy. The latter would be bullish up to the strike but not much beyond it. (See our Education section)
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Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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