All Tech

Options Trader: Monday Outlook

Can you run through the math on your IMAX covered call trade? Or can anyone else for that matter? If you pay $8.00 for a stock today and you receive $1.00 in premium your total cost for the trade is $7.00. But if/when you get called away at $7.50 you will have made $0.50 divided by your total cost of $7.00 is 7%, not 14%. Am I calculating something incorrectly?

SanDisk: Risk Down $3, Reward Up $30

Regarding Net Cash per share, user 140904 is correct. You missed a big chunk of cash in the LT Investments line item. As of Sept 30, 2007 Sandisk had $970mm in cash, $1.334Bn in ST Investments, and $1.824Bn in LT Investments for a total of $4.128Bn. Subtracting the $1.25Bn in the convertible (which is not due til 2013 and only pays 1% per annum) you have $2.878Bn in Net Cash or $12.51 in Net Cash / share. At todays stock price of $27 - $12.51 = $14.49 of value for company operations which should produce $2.50-$3.00 in '08 and $3.50-$4.00 in '09. So that gets you a multiple of 5.27x '08 and 3.9x '09 estimates.

But the best part is that Sandisk will put up another $200mm+ of cash in the just finished Q4 so the actual numbers are even lower and the company as of today has $13.50 in net cash, leaving $13.50 for compay operations or 4.9x '08 and 3.6x '09. Which my friends is pretty damn cheap for the best run company in the fastest growing part of the semiconductor sector and arguable the entire technology sector.