In mid June we saw sign a potential warning sign developing on SanDisk Corp (SNDK), Nokia Corp (NOK), and Micron Technology, Inc (MU). All three stocks had been weak but were seeing net call accumulations. Since that post, shares of NOK have lost 1% while MU and SNDK have dropped 37% and 38%, respectively.

What drew my attention to this post was that I noticed some heavy call accumulations, once again, on SanDisk. Over the last 5 days, the International Securities Exchange (ISE) buy-to-open data shows there have been 16,186 call purchased. This compares to only 2060 puts. Meanwhile, trading on Nokia Corp, and Micron has been more balanced.

Given the relatively flat action of NOK and the loss in MU, it makes sense to see mixed option trading. In other words, there isn't much of a sentiment read from that data here. However, the continued optimism on SNDK is a bit perplexing when viewed in the context of the chart below.

Chart Courtesy of Thomson Financial

Here we see the steady price erosion that has been taking place since early-2006. The stock has dropped from its highs near 80, to its current price near 15.

Part of the call activity may have been driven by takeover rumors. If the company is truly in play then call options do give you the ability to leverage a pop with limit risk. However, it seems that a takeover may be about the only catalyst that could provide a pop here.