Snap plunged on weak results last month, and some options traders may be targeting further downside.
Check out this unusual activity from yesterday in the social-media stock:
- More than 29,000 November 6 puts traded, mostly for $0.17.
- About 16,000 December 8 puts changed hands for $0.87 to $0.92.
- Almost 16,000 October 8 puts traded, mostly for $0.37 and $0.38.
- Volume exceeded open interest in all three contracts, which suggests new money was put to work.
Puts fix the level where a security can be sold, so they can gain value when prices fall. They can also become worthless if a stock is above the strike price on expiration.
SNAP fell 1 percent to $8.53 yesterday and has lost about half its value in the last two months. Most of the decline came after earnings, revenue and guidance missed estimates. While its user base increased by 9 percent, its fastest growth was in international markets where monetization is rising more slowly.
For example, North American usage was flat but average revenue per user (ARPU) rose 12 percent. In the Rest of World (excluding Europe), traffic rose 16 percent while revenue per user increased just 4 percent. That could make investors doubt the quality of its growth.
Monday’s November 6 puts could be especially noteworthy because SNAP hasn’t been at that level in over 5 years.
Overall option volume was almost twice the daily average, according to TradeStation data. Puts accounted for a bearish 69 percent of the total.
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