Daily Options Selling Strategy | Following the pullback of Sandisk and Intel in the previous trading session, optimistic about the long-term value of storage and CPU. How to use options strategies to buy the dip?

I. Market Barometer

In the previous trading session, the three major U.S. indexes closed mixed, with significant pullbacks in the semiconductor sector. Leaders in CPU and memory sectors faced pressure simultaneously, notable stocks $SanDisk (SNDK.US)$ 、 $Intel (INTC.US)$ plummeted, providing trading opportunities for options selling strategies.

II. Focus on Hot Targets

$SanDisk (SNDK.US)$ : The previous trading day saw a drop of over 6%, leading declines in the memory sector.

$SanDisk (SNDK.US)$ closed down 6.17% the previous trading day at $1,452.02, with a trading volume of $24.573 billion and a turnover rate of 12.46%, showing one of the largest adjustments within the memory sector.

Market sentiment was primarily weighed down by two negative factors:Firstly, the stronger-than-expected rebound in U.S. CPI data further cooled market expectations for rate cuts, putting valuation pressure on high-growth tech stocks; secondly, recent sharp gains in memory stocks triggered profit-taking, dragging down the overall sector and pressuring Western Digital’s stock price.

From a long-term perspective, fundamentals are supported by multiple tailwinds. First, AI server DRAM/NAND demand remains robust, with spot prices for NAND Flash rising for several consecutive quarters, and the supply-demand dynamics of the industry continuing to improve. Additionally, as a global leader in NAND supply, the company's memory business shows consistently improving gross margins, indicating strong earnings visibility.

Technically, Sandisk’s short-term support lies near the $1,400 level. The previous trading session saw the lowest price dip to $1,367 before finding support, with maintained trading volume indicating solid underlying support. If the correction breaks below $1,300, the next support levels are around $1,142 (20-day moving average) and $1,023 (30-day moving average).

$Intel (INTC.US)$ : Plunged nearly 7% in the previous trading session

$Intel (INTC.US)$ closed down 6.82% at $120.61, with a trading volume of $20.701 billion and a turnover rate of 3.44%.

Intel's decline is similar to that of SanDisk, suppressed by the stronger-than-expected rebound in US CPI data and the previous sharp rise in the sector, with strong short-term profit-taking sentiment.

From a technical perspective, Intel’s share price gapped down below the support of the 5-day moving average. The short-term resistance level is near the previous high of $132. In the prior trading session, the highest price only reached $127.79 before retreating rapidly. Trading volume surged to 173 million shares, indicating relatively heavy short-term selling pressure. The market may enter a consolidation phase going forward, with key support levels at the 10-day moving average of $109 and the 20-day moving average of $90.

III. Seller Options Strategy

Cash Secured Put:

1. Sell 1 lot$SanDisk (SNDK.US)$20260618 1000P, estimated required margin (for reference only): $100,000 ($1000 × 100)

2. Sell 1 contract $Intel (INTC.US)$20260529 100P, estimated required margin (for reference only): $10,000 ($100 × 100)

Filtering logic:

For investors who are optimistic about the long-term AI sector but are concerned about the risk of a short-term pullback when buying the underlying stock, they can generate premium income by selling Puts.

The current underlying still has fundamental and demand-side catalysts for support, and directly chasing higher prices carries a pullback risk. Selling Puts can collect premiums, which, if the stock price continues to rise or remains volatile at high levels, can enhance the annualized return on idle funds. If the stock price retraces to near the strike price, it also allows for planned entry at a more favorable price.

IV. Risk Control Reminder

Although the seller strategy has a high probability of success, investors must still manage risks effectively:

– Position management is key:The biggest risk for option sellers lies in black swan events. It is recommended that margin exposure for a single underlying should not exceed 20% of total capital. Never sell options beyond your capacity for the sake of greedy premiums.

– Timely rolling of covered call options: When a covered call option becomes deeply in-the-money (stock price far exceeds the strike price), and if the underlying stock is still viewed favorably, decisively 'roll' the position — that is, close the current option by buying it back and simultaneously sell an option with a later expiration date and a higher strike price to avoid having the stock called away at a low price.

– Cash-secured put options warn of 'left-tail risk':For cash-secured puts, if the stock price collapses due to deteriorating fundamentals (rather than a normal pullback), do not hold on stubbornly. At this time, stop losses should be executed, or 'rolling down' can be employed to buy time and wait for volatility to normalize.

Make the most of the options seller zone to understand income strategies for selling options,Earn option premiums!

Options Risk Warning

An option is a contract that grants the holder the right, but not the obligation, to buy or sell an asset at a fixed price on a specific date or at any time before that date. The price of an option is influenced by various factors, including the current price of the underlying asset, the strike price, time to expiration, and implied volatility. Implied volatility reflects the market’s expectations for the level of volatility in the option over a future period. It is a data point derived inversely from the Black-Scholes option pricing model and is generally regarded as an indicator of market sentiment. When investors anticipate greater volatility, they may be more willing to pay a higher price for options to hedge risks, resulting in higher implied volatility. Traders and investors use implied volatility to assess the attractiveness of option prices, identify potential mispricings, and manage risk exposure.

Disclaimer

This content does not constitute any offer, solicitation, recommendation, opinion, or guarantee for any securities, financial products, or tools. The risk of loss in trading options can be substantial. In some cases, losses incurred may exceed the initial margin deposited. Even if you set contingency orders, such as 'stop-loss' or 'limit' orders, these may not necessarily prevent losses. Market conditions may make such orders unexecutable. You may be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be responsible for any shortfall in your account resulting from such liquidation. Therefore, before trading, you should study and understand options and carefully consider whether such trading suits you based on your financial situation and investment objectives. If you trade options, you should be familiar with the procedures for exercising options and the rights and obligations upon expiration. Options trading involves extremely high risks and is not suitable for all investors. Investors should read Characteristics and Risks of Standardized Options carefully before engaging in any options trading strategy.

Editor/Doris

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