Unusual Options Activity: Snap Inc (SNAP)

Shares of social media company Snap Inc (SNAP) have been trying to break out of a downtrend in recent weeks. One trader sees a moderate move higher in the next few days.

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  • That’s based on the April 8th $40 calls. With 9 days until expiration, 8,050 contracts traded compared to a prior open interest of 148, for a 54-fold surge in volume on the trade. The buyer of the calls paid $0.44 to make the buy.

    Shares lased traded just over $36, so they would need to rise about 10 percent by the end of next week in order for the option to move in-the-money.

    The social media company has seen shares slide about 29 percent in the past year, as the company has continued to operate at a loss, even as revenue has surged by over 42 percent.

    Action to take: Shares have been holding steady in the past few weeks, and look set for a move higher. Investors don’t have to contend with the challenges of the options market to bet on a sizeable rally in the coming months by simply buying shares, although the stock is a long ways away from paying a dividend.

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  • For traders, the April calls are aggressive with so little time left, but could still offer mid double-digit gains. Less aggressive traders might want to consider a strike date further out to take advantage of what will likely be a longer-term move higher for shares.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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