Sandisk Plummets 6.6% Amid AI Hype and Volatile Options Activity: What's Next for the Storage Giant?

Summary
• Sandisk (SNDK) plunges 6.6% intraday to $99.34, erasing nearly $7B in market value
• BofA’s doubled $125 price target for SNDK sparks sharp reversal in sentiment
• Options volume surges 175x on 10/3 expiration, with 95-strike puts dominating
• RSI hits 100.0 (overbought), Bollinger Bands widen to 82% range
• Sector peers like Western Digital (-0.26%) remain resilient despite SNDK’s collapse

Sandisk’s dramatic intraday selloff defies its recent AI-driven rally, as traders unwind bullish bets amid mixed sector fundamentals. The stock’s 6.6% drop—its largest single-day decline since the spinoff—has triggered a cascade of options activity, with volatility metrics flashing red flags for short-term traders. As the NAND flash market braces for a potential pricing inflection, investors must navigate a volatile landscape where optimism clashes with valuation realities.

AI Hype Unravels as NAND Pricing Optimism Fails to Materialize
Sandisk’s freefall stems from a dislocation between analyst optimism and near-term execution risks. While BofA’s upgraded $125 price target highlighted AI-driven NAND demand, the market is now pricing in execution risks: 1) Data center demand growth (12% of revenue in H1 2025) may not offset consumer segment headwinds; 2) China’s production restrictions could delay supply-side adjustments; 3) Micron’s upcoming earnings report (same day) threatens to dilute NAND pricing momentum. The stock’s 180% post-spinoff surge has created a valuation gap—trading at -8.8x P/E—forcing algorithmic traders to rebalance portfolios as RSI hits 100.0 (overbought) and MACD (14.58) diverges from price action.

Options Playbook: Capitalizing on Volatility with 10/3 Expiry Contracts
• RSI: 100.0 (overbought)
• MACD: 14.58 (bullish), Signal Line: 11.69 (divergent)
• Bollinger Bands: Upper $116.32, Middle $75.28 (bearish shift)
• 30D MA: $65.46 (far below current price)
• Key support: $96.63 (intraday low), resistance: $107.72 (intraday high)

Short-term traders should focus on the 10/3 expiry window, where 95-strike puts and 96.5-strike puts dominate volume. SNDK20251003P95 (IV 89.29%, leverage 25.60%, delta -0.358) and SNDK20251003P96.5 (IV 69.89%, leverage 30.02%, delta -0.384) offer optimal risk/reward profiles. Both contracts exhibit high gamma (0.0255, 0.0333) and theta (-0.1113, -0.0484), suggesting strong price sensitivity and time decay advantages. For a 5% downside scenario (SNDK at $94.37), SNDK20251003P95 would yield $10.63 profit per contract, while SNDK20251003P96.5 would return $12.13. Aggressive short-sellers may consider these puts as hedges against a potential breakdown below $96.63 support.

Backtest Sandisk Stock Performance
Here is the event-study you requested. I identified every session since 2022 in which SNDK’s closing price finished ≥ 7 % below the previous close (five observations in total) and examined the next 30 trading days.Key findings (sample size: 5 events) • 1-day bounce: average +2.0 %, 80 % win-rate • Weak follow-through days 4-15 (average draw-down ≈ –7 %) • Recovery from day 18 onward: by day 25 the average position is +13 – 15 %, with an 80 % win-rate • Statistical confidence is low (small sample, t-tests not significant at 90 %) – treat conclusions as directional only. • Caveat: intraday information was unavailable; the trigger used is close-to-close –7 % or worse, a slightly stricter condition than “intraday plunge”. Open the interactive panel on the right to explore event-by-event equity curves and metric tables.(If the module does not open automatically, please expand the “Canvas” pane on the right side of the chat.)

Critical Crossroads: Buy the Dip or Sell the Rally?
Sandisk’s 6.6% plunge creates a pivotal inflection point for long-term investors. While BofA’s $125 price target remains intact, the stock’s -8.8x P/E and -6.6% intraday drop signal near-term volatility. Traders should monitor the $96.63 support level and 10/3 options expiry for directional clues. Western Digital’s -0.26% move highlights sector resilience, but SNDK’s technicals suggest a short-term bearish setup. For those with conviction in AI-driven NAND demand, a $95–$96.5 range offers a high-probability entry zone. However, a breakdown below $96.63 could trigger a retest of 52W low ($27.89). Aggressive bulls may consider SNDK20251003C97 into a bounce above $100.00.