SNAP Options Pop After Security Joins Trump Social Media Block

The stock sports attractively priced premiums at the moment

Digital Content Manager
Jan 7, 2021 at 3:44 PM
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The shares of Snap Inc. (NYSE:SNAP) are up 4.7% to trade at $52.15 at last check, after the social media giant joined the likes of Twitter (TWTR) and Facebook (FB) in blocking President Donald Trump from posting on its platforms. The move came after Trump used social media to communicate with the domestic terrorists that attacked the U.S. capitol on Tuesday, and to spread false claims of widespread fraud in the presidential election.

The equity has experienced significant growth over the past year, culminating in a Dec. 17, all-time-high of $54.71. And while shares have slightly cooled off from those levels, they are still getting support from the 40-day moving average. Year-over-year, SNAP sports a 213.3%  lead.

SNAP 40 Day

Options are running slightly hotter than usual today. So far 198,000 calls have crossed the tape, which is almost twice the intraday average. Most popular by far is the monthly January 2021 55 call, followed by the weekly 1/8 53-strike call, with new positions currently being opened at the former.

In addition, the major tech concern appeared on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume within the last two weeks, with new names to the list highlighted in yellow. More specifically,  222,333 weekly calls, and 118,307 weekly puts have crossed the tape in the past 10 days.

MAO 0107

The brokerage bunch is overwhelmingly optimistic, with 21 of the 28 analysts in question calling the equity a "buy" or better, compared to six that give it a tepid "hold" or worse. Meanwhile, the consensus 12-month target price of $43.49 is a hefty 16.6% discount to current levels, meaning price-target hikes could be in store for Snap stock. 

Now could be the right time to speculate on the security's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 55% sits in the 19th percentile of its annual range, meaning options players are pricing in incredibly low volatility expectations at the moment. What's more, its Schaeffer's Volatility Scorecard (SVS) sits at an elevated 98 out of 100. This indicates the equity has tended to exceed option trader's volatility expectations during the past year. 

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