Skip to main content

One thing about a market sell off is, there are some short-term cracks on great long-term companies. The market worries create sell-off opportunities where you can move up and down the strikes looking for options to write. One that popped up was SanDisk (SNDK) .

I made a recommendation before on SNDK that worked well, and this seems like a similar scenario. First, in Aqumin's AlphaVision landscape, I saw that SNDK had the biggest jump in 30-day implied volatility (at 12.7%) of any semiconductor memory chip maker, on high volume (back right corner, % change and volume numbers). Also, it was down the most for the day (that is the dark red tower).

Someone wanted out. Notice the pattern of increasing volatilities and higher volumes of each issue culminating with SNDK across the plate of semiconductor memory names. Money was buying contracts across this group pushing implied volatility up. SNDK was leading the group (albeit down). I have 30-day historical volatility in SNDK at 46 on yesterday's close. Here I would like to play a bounce in the group by selling a put (the 35 put in September on a 55v) in SNDK.

SanDisk (SNDK) Volatility
Source: Aqumin

View Chart

Trade: Sell 1 (maybe think about scaling in a second put) SNDK September 35 put at $1.15 on a 32 delta with SNDK trading $36.97.

At the time of publication, Andrew Giovinazzi held no positions in the stocks or issues mentioned.

Scroll to Continue

TheStreet Recommends

OptionsProfits, a new provider of options news from TheStreet, educates investors and acts as a catalyst for trading.

Andrew is the Executive Vice President of Business Development for Aqumin, where he participated in the design team to apply AlphaVision to the financial markets. For 15 years he was a member of the Pacific Exchange and the Chicago Board Options Exchange, where he actively made markets and traded in both equity and index options. At the same time Andrew started and ran the Designated Primary Market Marker post for Group One, Ltd. on the floor of the CBOE where it became one of the highest grossing posts for the company in 1992 and 1993.

Readers Also Like:

>>A Bear in Bull's Clothing

Readers Also Like:

>>Making Green With Gold

Readers Also Like:

>>Burger King Grilled by Analysts