SanDisk is getting a lot of buzz this morning. The company raised Q1 revenue forecast from $875M - $950M million to $925M - $1B. Additionally, they raised Q1 margins to 40%. The stock is trading around $31.50
Immediately we already have at least 3 analysts upgrading the stock and raising the price target to upper $30's. I think all this should put a floor under the stock. Fundamentally, stock is cheap trading at 13.5x forward earnings (before raising the guidance) and 3.5x cash.
I would generally take a rather much aggressive bullish stance with this kind of raised guidance, but given that the stock is already up some 8.5% this morning, I like the following bull put spread:
- Buy to open March $29 puts- Sell to open March $30 puts
I just filled the order for net credit of $0.24. As long as shares remain above $30 by March expiration, the trade pays 31% profit before commissions over next three weeks by expiration. I like the odds.
Good luck!
- Buy to open March $29 puts
