Goldman Sachs Suggests Buying Straddles on SanDisk

Goldman Sachs is out with a research note this morning, where it suggests that traders buy straddles on SanDisk

ahead of gross margin guidance. The Goldman analysts noted that SNDK options are implying a +/-8.2% move on earnings, lower than the 8Q median move of +/-9.1%. GS Semiconductor Analyst James Schneider expects similar volatility this quarter, if not more, given the fact that SNDK will be issuing 2012 guidance that he expects to come in as much as 11% below the Street. They believe, at current levels, potential near-term gross margin weakness is not priced into the stock. The analysts suggest buying the Feb2012 $52.50 straddle for $4.84. SanDisk Corporation is engaged in designing, developing and manufacturing data storage solutions in a range of form factors using the flash memory, controller and firmware technologies.