Tony Zhang: Snap Inc Is Still Misunderstood; Here's How To Play The Options

Tony Zhang said on CNBC's "Options Action" that analysts still continue to misunderstand Snap Inc SNAP. The stock traded sharply higher and Zhang thinks there is more room on the upside next week as the company is due to report earnings on Thursday.

The options market is implying a move of 17.5% in either direction, so the stock is quite volatile. Zhang wants to sell a put spread in the name to exploit high volatility. He wants to sell the March $51/$44 put spread for a net credit of $3.20. If the stock stays above $51 at the March expiration, he is going to collect the premium. He starts to lose money below $47.80 and he can maximally lose $3.80.