Written by Douglas Estadt

 

Ash Rust from StockTwits http://twitter.com/ashrust explains an options play he opened today with SanDisk.  Here’s how he played SNDK:

•  Shorted Mar. 19: 31/32 calls
• Shorted the 31 call and bought the 32 (this way he’ll reduce risk significantly)
• Sold the call @ .60 and bought the 32 call at .37

He thinks that it’s not going to go too much further up and at the same time is giving himself another 5-6 % of room. This will pay 30% as long as SNDK closes below 31 on March expiry.

• Bought Mar. 26 puts at .37 (with the puts he is genuinely shorting the stock)

Ash doesn’t think it will stay at 26 for too long, it may drop, volatility will go up, and the put will increase in value.  If this happens, he could sell for up to a 50% gain.

 

To hear more about Ash on SNDK view the video below

 

To have some of your risk capital autotraded for you on Covestor Investment Management, see my model here.

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