Unusual Options Activity: Snap (SNAP)

Shares of social media giant Snap (SNAP) have been trending stronger in the past year, with a further jump after beating earnings last week. One trader sees the chance of a continued move higher in the next month.

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  • That’s based on the September 3 $82 calls. With 22 days until expiration, over 7,815 contracts traded against a prior open interest of 146, for a 53-fold jump in volume. The buyer of the calls paid about $1.57 to make the trade.

    The stock has traded as high as $80.85 in the past year, so a move to $82 would represent a continued move to a new high for the company.

    While the social media company is not yet profitable, revenue is up by triple-digits over the past year and subscriber growth has been solid, explaining why shares are up nearly 260 percent over the past year.

    Action to take: Shares are still expensive by any measure, with a forward PE estimate of 270. And Snap is the first company where shareholders don’t have any voting rights. So it may be better to simply trade the volatile shares rather than hold them.

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  • In that case, these calls could lead to some decent returns in the coming few weeks, given the current trend of shares overall. Traders should look to take quick profits, especially if shares stay under the strike price of $82. Traders may want to consider looking at a strike date farther out, although it will increase the price of the option to do so.

     

    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.