Trade Alert: Adding to this storage position

Apple is below $600?! How can that be?! Just kidding. $600 is just an arbitrary number that people got excited about because it ends with two zeros. $615 and $596 is pretty much the same thing — just 2% apart. Divide everything by 100 or by 10 in your mind when you deal with Apple if that helps.

Anyway, the thing I wanted to mention this morning is Sandisk. The stock is down 4% plus this morning as traders sell it because of headlines like this: Micron, SanDisk slip on NAND pricing worries

Meanwhile, let me give you some facts from the Micron call that those of us who actually listened to it heard:

MU – Micron Technology : Memory Mix Shift Negatively Pressuring Near-term Revenues and Margins; Maintain Neutral – Micron reported 2Q revenue of $2.1 B which was higher than ours and the consenus’ estimates due mainly to better-than-expected revenue from NAND Flash and DRAM, offsetting continued weakness in the NOR segment driven by soft demand in the wireless market. The company reported a GAAP EPS loss of ($0.23), which was $0.06 better than our estimate and $0.03 lower than consensus expectations. Management mentioned improvements in DRAM fundamentals due to a stabilizing PC demand environment. Although NAND demand outlook remains healthy, ASPs/margins will be negatively impacted by a mix-shift towards lower margin products in 3Q.  (From JP Morgan)

Remember that Sandisk is in the NAND business, not the DRAM business. And it sure looks like another very positive datapoint for us Sandisk investors. I’ve recently had Sandisk the highest-rated stock in the portfolio and I’m going to take advantage of having done my homework and buying some Sandisk calls. I’m going out to January of next year and buying some Sandisk calls with a strike price from $45 to $50 each or so. No rush but the big reason why I’m giving myself out to January on the trade is because it could take awhile for the market to believe the sustainability of Sandisk’s ongoing boom.