Falling prices for NAND and flash memory chips (those used in gadgets ranging from digital music players to cell phones) forced SanDisk (SNDK: sentiment, chart, options) to a sharp loss in the second quarter. The stock is off more than 9% in after-hours trading, more than erasing today's gain or about 2%. For the record, SNDK posted a net loss of $68 million, or 30 cents per share, down from a profit of $28 million, or 12 cents per share, last year. Revenue fell 1% to $816 million, compared to the consensus estimate for growth of 9%.

Excluding one-time items, the company lost $22 million, or 10 cents per share. On this basis, analysts were looking for a profit of 12 cents per share. SanDisk also said it was delaying the next phase of expansion at its Fab 4 plant until industry conditions improve.

Checking in on investor sentiment, it seems that options players were expecting much more from the company. SNDK's Schaeffer's put/call open interest ratio (SOIR) of 0.36 ranks below 89% of all those taken during the past year, indicating that options traders have been more bullish only 11% of the time during the past year. An unwinding of this optimism following SNDK's weaker-than-expected earnings report could extend tonight's after-hours selling pressure into the open tomorrow.