SNAP Stock Bear Put Spread Strategy
Reviewing SNAP’s options and with earnings, or a lack thereof, on the horizon in early May; I like using a bearish vertical for positioning. The vertical limits risk to a defined amount and cuts down additional options risks as the spread is contract neutral.
With shares of SNAP at $20.93, the May $20/$18 bear put spread is priced for 65 cents. If the stock heads lower, the max payout of $1.35 occurs if SNAP is below $18 at expiration. To break even, this trader would need shares to drop to $19.35. That’s marginally below last week’s pivot and in effect, would break the bullish higher low pattern.
In the interim and should SNAP begin to decline sooner rather than later, profits will slowly begin to accrue. Ultimately though, verticals like this are a compromise, as the safety features of lesser Greek risks works both ways.
Bottom line though, this type of position isn’t as likely to disintegrate either … now that’s something I’d definitely snap.
Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT.