Amgen, SanDisk Draw Option Traders

Option trading investors are watching the action in Amgen and SanDisk. The drug
maker Amgen (NASDAQ: AMGN ) has been dropping but one trader remains bullish.
The AMGN January 2013 option contracts are leading the activity: Blocks of 4,540
each of the 50 puts and 60 calls trade, both well above open interest.
OptionMONSTER's Heat Seeker tracking program shows the trader bought 4,200 of
the calls for $3.87 and sold the same number of the puts for $5.92 at the same
time. It resulted in a credit of $2.05, which will be kept if AMGN remains
between the strikes. Above $60, he or she will make money. They face losses
below $50, so the position is similar to owning shares. Overall AMGN options
volume is about twice the average level so far today. AMGN fell 0.59 to $52.47
in morning trading. It peaked at high as $54.70 last week. Find more option
analysis and trading ideas at Option Trading Strategies . SanDisk (NASDAQ: SNDK
) has been in a steep decline for the last month, and one trader is looking for
more of the same. SNDK closed yesterday at $42.90, down 1.36%. The maker of
computer-memory chips has fallen from above $53 in February but is holding its
ground above last week's lows. Leading the options volume this morning is SNDK
July 37 Puts . OptionMONSTERs Depth Charge tracking system shows 2,500 contracts
were bought for $1.79 and another 250 for $1.83 as the underlying price fell.
This volume is almost three times the previous open interest, so these were new
opening positions. Between these two options trades we see two large blocks of
stock going off with 33,900 bought for $43.22 and another 60,000 bought for
$43.27. It is highly probable that the puts were bought against long stock,
creating a long volatility position that can potentially profit if shares rise
or fall, as long as the move is great enough that the realized volatility is
greater than the implied volatility of the options. optionMONSTER ® provides
stock market insight, option trade ideas, and options education to meet the
needs of do-it-yourself investors.