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Option Traders Betting Snap Strength Will Continue

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Option Traders Betting Snap Strength Will Continue

Snap Inc (NYSE: SNAP) shares are up 159.3% year to date, and a handful of large options trades on Friday morning suggest the polarizing stock has option traders’ attention.

The Trades

On Friday morning, Benzinga Pro subscribers received an option alert related to several unusually large Snap option trades.

At 9:30 a.m., a trader sold 900 Snap call options at a $16 strike price that expire on Aug. 16. The calls were sold at the bid price of 60 cents and represent a $64,000 bearish bet.

At 10:38 a.m., a trader sold 2,588 Snap put options at a $13 strike price that expire on Aug. 16. The puts were sold in two different trades at bid prices of between 48.1 cents and 49.1 cents and represent nearly a $125,000 bullish bet.

At 10:53 a.m., a trader sold 1,135 Snap put options at a $14 strike price that expire on Aug. 16. The puts were sold at the bid price of 87 cents and represent a $98,746 bullish bet.

At 11:35 a.m., a trader bought 980 Snap call options at a $12 strike price that expire on Jan. 15, 2021. The calls were bought at the ask price of $5.101 and represent a $499,898 bullish bet.

At 12:08 a.m., a trader sold 2,476 Snap call options at a $13 strike price that expire on August 16. The puts were sold at the bid price of 52 cents and represent a $128,752 bullish bet.

All together, the trades represent a net $788,000 bullish play on Snap.

High Earnings Expectations?

The bullish trading activity comes ahead of Snap’s second-quarter earnings report expected out on July 23. All but one of Friday's option trades involved contracts expiring in August, making them relatively short-term plays.

The bullish trades may also have come in response to a Snap upgrade by Goldman Sachs on Monday. The analyst cited product improvements “driving positive trends in user growth and engagement” in upgrading Snap from a Neutral rating to a Buy rating. Friday’s option traders may have taken a closer look at the near-term outlook for Snap following the upgrade.

Unfortunately, it’s impossible to be 100% certain if an option trade is a hedge or not. Stockholders often use call options to hedge against a larger bearish stock position. Given the Snap option trades’ relatively small sizes, they are unlikely to be a hedge in this case.

Snap's stock traded around $14.19 per share at time of publication.

Related Links:

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