SanDisk Hits a New High: How Can You Capitalize on the Uptrend in the Storage Industry?
Storage Trio Into Earnings: Will SanDisk Plunge? An Options Playbook
This week, U.S. Q4 earnings season is hitting peak intensity. In addition to four Mag-7 names (Microsoft, Meta, Apple, and Tesla) reporting results, three widely watched storage stocks are also set to report: Seagate (STX), Western Digital (WDC), and Sandisk (SNDK). STX goes first after today’s close, while the other two report after the close on Thursday (Jan 29).
These three storage companies sit in closely related segments of the data-storage value chain—often moving as a group. In this note, we’ll walk through what matters most for this earnings print, and how the options market can be positioned into the event.
1. STX (Seagate)
Seagate is a leading player in nearline HDDs for data centers. Its Mozaic HAMR (Heat-Assisted Magnetic Recording) platform has already been qualified by multiple cloud customers and is now ramping.
Last quarter, the company delivered Revenue of $2.63B and Non-GAAP EPS of $2.61. For the upcoming quarter, management guided to:
– Revenue: $2.70B ± $0.10B
– Non-GAAP EPS: $2.75 ± $0.20
Street consensus currently sits around $2.73B / $2.78, slightly above the midpoint of guidance but still well within a reasonable range.
2. WDC (Western Digital)
The current listed entity WDC is the post-spin company following the separation of Sandisk. Today, WDC is effectively a pure-play HDD company (particularly in data-center nearline HDDs), while Sandisk is now the standalone flash/NAND business.
For this quarter, WDC’s official guidance is:
– Revenue: $2.9B ± $0.10B
– Non-GAAP Gross Margin: 44–45%
– Non-GAAP EPS: $1.88 ± $0.15
The core narrative is straightforward: steady data-center demand + a richer mix toward higher-capacity drives = margin expansion. Street expectations are broadly aligned with the midpoint of guidance.
3. SNDK (Sandisk)
Sandisk is a NAND/flash company and breaks its end markets into Datacenter / Edge / Consumer.
Management’s guide for this quarter is notably aggressive:
– Revenue: $2.55–2.65B
– Non-GAAP Gross Margin: 41–43%
– Non-GAAP EPS: $3.00–3.40
Publicly visible consensus prints roughly around Revenue ~$2.62B and EPS ~$2.94 (note: different platforms may mix GAAP vs. Non-GAAP measures).
The setup is highly sensitive because the market is laser-focused on how quickly NAND price increases flow through to reported margins and earnings. TrendForce expects 1Q26 NAND contract pricing to rise +33% to +38% QoQ, with:
– Client SSD: +40% to +45%
– Enterprise SSD: +28% to +33%
If the margin realization from higher NAND pricing is fast enough—and if management’s commentary on pricing durability / supply discipline stays constructive—shares could be supported. If not, today’s elevated expectations and valuation may invite a sharp pullback.
4. Options Positioning
IV levels
From an implied volatility (IV) standpoint, WDC, STX, and MU trade at similar levels: longer-dated IV is around the 70 range, while near-term IV has been bid up to 100+.
Sandisk, however, stands out. After a powerful rally, the stock has accumulated substantial gamma-related positioning, keeping even longer-dated IV around ~100, while front-end IV is well into the 160s.
IV percentile
On an IV percentile basis, SNDK is still relatively new as a listed name and sits around the ~80th percentile. Meanwhile, WDC and STX—typically “steadier” storage incumbents—have seen IV spike amid the recent surge in share prices, leaving them at extremely elevated ~94–99% historical percentiles.
Given IV’s tendency toward mean reversion, longer term, IV across these names should normalize. From that perspective, being an options seller is structurally more attractive than being a buyer over time.
IV crush
Historically, both WDC and STX have shown a clear post-earnings IV crush. For example, the chart below shows STX’s IV crush behavior: during more stable periods for the storage sector, STX often experienced a meaningful post-print volatility collapse—roughly ~10 vol points. However, in the 2025 Q3 earnings season (the company’s FY26 Q1), the stock had already begun to surge and experienced a gamma squeeze, and IV crush was far less pronounced.
This time, with positioning even more extreme, post-earnings IV collapse may again be limited.
Sandisk has a shorter post-IPO history. In its first two earnings cycles, IV crush was about ~15 vol points. Last quarter, however, after the stock’s sharp run and a pronounced gamma squeeze, IV did not collapse post earnings.
A consecutive gamma squeeze potential
From a gamma positioning perspective: unless the post-earnings realized move comes in materially below the market’s expected move (EM), IV may only grind lower slowly. Conversely, if the stock gaps hard higher or lower, the resulting hedging flows can intensify gamma squeeze dynamics, keeping IV elevated.
Expected move
Based on current pre-earnings IV, the market is pricing STX for roughly a 10% expected move. That means if you buy short-dated options purely as an earnings bet, you generally need a ~10% post-earnings move (up or down) just to break even; you need more than that to generate profit—assuming you’re also right on direction.
Sandisk is even more demanding: the market is implying about a 16.46% move. For short-dated options to be profitable, you typically need the stock to move more than ~16.46% after earnings. Given how much SNDK has already rallied, another 16% upside in a single post-earnings move is difficult—though that doesn’t automatically imply a collapse.
Strategy idea
Given the uncertainty around SNDK’s margin/price pass-through and the comparatively more forecastable setups in STX and WDC, investors who prefer not to take excessive event risk may consider longer-dated premium-selling structures in WDC/STX, such as farther-out short puts or a short strangle.
For example, in STX, one could consider a 2–3 month tenor short strangle, effectively “solving” the trade within one quarter. As for strike selection, I’m relatively risk-averse, so I’d set a very wide range. Readers can adjust strikes based on their own view of a reasonable trading range.
If you still want additional protection, you can add wings on both sides to form an iron condor.
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