SNAP Put Options Still Popular After Post-Earnings Plunge

After Snapchat shares got smacked by traders on Thursday, put options are unusually active

May 12, 2017 at 3:31 PM
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Shares of Snap Inc (NYSE:SNAP) got hit hard on Thursday, falling more than 21% in the aftermath of the Snapchat parent's bleak earnings report. After that blistering sell-off, maybe it's no surprise to learn that put options are unusually active today on SNAP stock -- but traders aren't exactly rushing to buy new bearish bets.

As we head into the final hour of trading, put volume on SNAP has accelerated to triple the norm, per Trade-Alert, with about 78,000 contracts crossing the tape so far. The most active option is the May 18 put, which expires a week from today. However, all indications suggest these puts were sold to open -- meaning the traders expect SNAP shares to remain above $18 through the next five sessions.

At this point, it's worth recalling that the Snapchat IPO price was set at $17 per share -- and equally notable that yesterday's low tick came in at $17.59, with SNAP recovering to finish at $18.05. Just a couple of months out from the stock's public trading debut, it would seem there are still plenty of deep-pocketed players looking to defend that IPO price.

Last month, options traders capitalized on the likelihood of support at SNAP's IPO level by selling to open April 18 puts. That strategy proved successful -- and after the stock's post-earnings trip to the woodshed failed to result in a print below that key psychological level, it looks as though May option premium sellers are once again betting on the big-money SNAP backers to remain on defense for at least another week.

At last check, SNAP shares are up 6.9% to trade at $19.29.
 

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