Sandisk Sees Bullish Trades Amid Stock's 200+% YTD Rally
$SanDisk Corp.(SNDK)$ saw smart money pour more than $10 million in bullish call option trade Monday as the stock extends this year's rally to more than 200%, buoyed by strong demand for its storage devices amid the rapid growth in artificial intelligence workloads.
An active buyer purchased call options that give their holder the right to buy 188,000 Sandisk shares at $750 each in the next 18 days, signaling optimism that the stock could further climb from its current level of $720.30. That block trade came as the implied volatility (IV), which measures the market's expectations in share price changes using variables including option premiums, reached 109% Monday, while the historical volatility reached almost 100%.
The IV percentile is now at 81%, meaning the current implied volatility is higher than 81% of the trading days in the past year, exchange data tracked showed. That translates to higher option premiums, making them attractive for sellers.
The stock gained more than 2% Monday, outpacing the 0.6% rise in the tech-heavy $NASDAQ(.IXIC)$
The stock has resumed its march toward its record peak, recouping much of the declines seen in the last few trading days of March when a wider tech selloff pushed Sandisk's share price down almost 26% from its all-time high of $772.09.
At current prices and volatility, a trade similar to the $10.3 million purchase of those $750 call options expiring on April 24 have a profit probability of about 28% for the buyer. The stock price will need to climb above the breakeven level of $802.10 for the buyer to make money from that trade. If that size of a rally materializes, the maximum profit potential could be unlimited. If it doesn't, and the call option expires worthless, the maximum loss potential is $5,210 per contract, which covers 100 shares.
That block trade, which is 10.31X the open interest, made those call options, the second most active contract tied to Sandisk. The third-most active is even more bullish, a call option with a strike price of $1,000 expiring by the end of the week. The heaviest trading was seen in deep out-of-the-money put options that give their holder the right to sell the stock at $600 by Friday.
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