economy
Sandisk is Flying High. How to Use Options to Generate Income from This Memory Chip Giant
The stock is on pace for big weekly gains, and an options play gives traders an opportunity to scoop up some income.
TL;DR
- Sandisk stock has risen nearly 35% this week, driven by a JPMorgan upgrade to overweight with a $2,250 price target.
- The company is transitioning to long-term strategic agreements (up to four years) with customers, shifting discussions to CEO/CFO level for AI infrastructure.
- Eight such agreements have been signed, representing approximately $100 billion in total contract value.
- This shift aims to increase revenue visibility, improve gross margins, and reduce industry cyclicality.
- The NAND market is projected to grow significantly due to AI inference workloads, from $70 billion in 2025 to over $300 billion in 2026.
- Sandisk has also authorized a $14 billion share repurchase program.
- A bullish put credit spread strategy is proposed to generate income from elevated option premiums, with a defined risk structure.
- A specific trade example involves selling the 8/21/2026 $1,350 put and buying the $1,300 put for a net credit of $6.00.