Snap's Latest Surge Draws Fresh Batch of Bulls

Snap calls have been popular in recent weeks

Jun 4, 2019 at 2:50 PM
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Snap Inc (NYSE:SNAP) is up 8% at $12.63 this afternoon. While there's no specific catalyst, the social media stock could be benefiting from a broad-market rally, or possibly a round of short covering, considering 7.6% of its float is controlled by bearish bettors. Whatever the reason, options are running hot, with most of the action being driven by bullish traders.

At last check, around 105,000 calls and 38,500 puts have changed hands, more than three times what's typically seen at this point in the session. The weekly 7/12 13.50-strike call is most active, due in part to a 5,959-contract block that Trade-Alert indicates was bought to open for roughly $231,805 (number of contracts * $0.389 premium paid * 100 shares per contract).

This initial cash outlay also represents the maximum risk on the trade, and will be surrendered if SNAP stock settles below $13.50 at the close on Friday, July 12, when the weekly options expire. Profit, meanwhile, will accumulate on a move above breakeven at $13.89 (strike plus premium paid).

Call buying has already been a popular options strategy on Snap, as the equity extends its recent bounce off the round $10 level. Since bottoming at a near-term low of $10.04 on May 13 -- just above its 80-day moving average -- the shares have rallied 25.8%, and are on track for their fourth straight win. Longer term, the shares of the Snapchat parent are up 129% year-to-date.

snap stock daily price chart on june 4

 

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