Snap Options Traders Bet A Higher Move Is On The Way

Snap Inc's SNAP stock attempted to make a move back toward its Feb. 24 all-time high of $73.59 on June 14, but instead formed a double top pattern at $65.66 and consolidated.

On June 16, the stock back-tested its breakout over a downward sloping trendline and shot back up on June 17 and 18. On Tuesday, Snap was in mini-consolidation on smaller time frames but hadn’t lost the low of Monday and was being supported by the eight-day exponential moving average on the daily chart.

A number of options traders believe the consolidation will help Snap gather enough strength to make a run north and together bet $338,301 the stock is headed higher this week and next. All of the expiry dates on the call contracts they purchased were for June 25 and July 2.

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Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Snap Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:49 a.m., Tuesday a trader executed a call sweep at the ask of 673 Snap options with a strike price of $65 expiring on June 25. The trade represented a $35,669 bullish bet for which the trader paid 53 cents per option contract.
• At 10:50 a.m., a trader executed a call sweep at the ask of 761 Snap options with a strike price of $65 expiring on June 25. The trade represented a $41,094 bullish bet for which the trader paid 54 cents per option contract.
• At 10:52 a.m., a trader executed a call sweep at the ask of 450 Snap options with a strike price of $62 expiring on June 25. The trade represented a $76,050 bullish bet for which the trader paid $1.69 per option contract.
• At 11:03 a.m., a trader executed a call sweep at the ask of 239 Snap options with a strike price of $65 expiring on July 2. The trade represented a $29,158 bullish bet for which the trader paid $1.22 per option contract.
• At 11:03 a.m., a trader executed a call sweep at the ask of 270 Snap options with a strike price of $65 expiring on July 2. The trade represented a $33,480 bullish bet for which the trader paid $1.24 per option contract.
• At 12:07 p.m., a trader executed a call sweep at the ask of 200 Snap options with a strike price of $61 expiring on July 16. The trade represented a $80,000 bullish bet for which the trader paid $4 per option contract.
• At 1:27 p.m., a trader executed a call sweep at the ask of 857 Snap options with a strike price of $65 expiring on June 25. The trade represented a $ bullish bet for which the trader paid $50 cents per option contract.

SNAP Price Action: Snap was trading down 1.8% to $62.40 at publication time.