Snapchat stock options are interesting.
Snapchat stock options might be something to look at. The company will be releasing their fourth quarter earnings after hours today.
Analysts are predicting Snap to post a loss of $409.4 million. That is worse than what Snapchat lost last year ($169.9 million). The California-based company will have to show if there has been sufficient user growth in their platform.
Competition is fierce. Instagram has about 300 million daily active users. The Facebook-owned company also comes out with similar to Snapchat’s products. Snap has an average of 178 million active users daily.
The Snapchat stock options are priced interestingly. The Feb 09 2018 puts seem to be on the cheaper end. This might indicate that the market makers are believing Snap will have better results than expected. One could buy a $13 put for $65, believing that there are more woes left in this company. These are very fruitful, in my opinion, because the company has not found any solutions on beating Instagram and/or Facebook.
The calls are expensive. For instance, one call of $14 strike price costs $100. This would mean that the options trader will only start making money if Snapchat gets to $15.01 by Friday. The stock would have to rise by $1.43. It might be too much to ask from this stock.
Options trading is not to be taken lightly. One can lose everything in a wrong trade. So be alert and knowledgeable before trading. I would also advise, if you believe in Snap, buy a good chunk of your tradable money into long-term call options and protect yourself with short-term puts. If the company releases bad earnings, you will profit mightily with those puts. You can cost average your long-term calls from the put profits. Add probably half the profits and keep the other half for potential cheaper prices.