Unusual Options Activity: Snap Inc. (SNAP)

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The November 2020 $27 calls on
Snap Inc. (SNAP) saw an 88-fold jump in volume, with over 28,560 contracts trade hands from an open interest of 321. The option, expiring in 57 days, is a bet that shares will rally just under 10 percent from their current price near $25.75.

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  • The option buyer paid about $2.29 for the option, so shares would need to trade as high as $29.30 to profit come expiration, a much bigger hurdle.

    Shares of the social media company have traded as high as $26.50 in the past year. The $27 calls are a level of bullishness indicating that shares are likely to move to new all-time highs in the next two months. The company will next report earnings in late October, with a few weeks left on this specific options trade.
    Action to take: With stocks a bit weak in the short-term, Snap has held up rather well. On a market rebound, it’s likely shares could move to an all-time high. Earnings can be a mixed bag for the company, but the company tends to have its best days during earnings season.

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    Traders may want to look for an opportunity to buy into this trade as well, given the low price and possibility to ride shares to a big move higher. It’s likely that this trade is one where investors may want to take any profits early, rather than try to hold the option until expiration.

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