Snap (SNAP) saw large opening sales on 10/3 for 4600 December $15/$9 strangles at $0.98 credit. With the $9 puts having a slightly higher delta than the $15 calls it leans small bullish delta overall for the higher probability strategy that takes advantage of selling rich option premium on a day the market saw volatility jump as well as SNAP being a volatile mover with an IV30 currently near 96%. The strangle sellers is essentially willing own stock at $9.00 minus the credit received which was nearly a buck, and feels comfortable short the $15 calls. The trade only requires minimal buying power required in a normal margin account so could give a solid return even just through time decay of the options and a typical position I would look to buy back for a profit at 50% of credit received.

A strangle sale like this also could also be done as a ‘covered stranlge’ and wouldbe ideal if a trader owns stock already and is willing to buy more at a lower price, while also being willing to be called away from their stock at the upper call short strike they sold, in this case being about 4.25 points above current levels and in the next 78 days until December expiration would translate into a handsome return of near 50% if called away.

SNAP is a $17.8B interactive social media company trading at 37x earnings, 3.3x sales and estimated to see revenues rising +14% in FY25. Short interest is down to 3.3% which is near recent lows and sometimes a bullish signal. Shares have been coming off the double bottom lows made this summer near 8.50 at the YTD value area low. It has some big volume profile resistance contend with now at 11.00 to 11.50 as the point of control for 2024 sits there which makes selling strangles more interesting as the stock could likely go sideways from here and consolidate the recent rally, making those Dec $15/$9 strangles decay in value and being profitable. As usual naked option selling is not for everyone but a low priced stock like SNAP makes it affordable for even the smallest accounts to get a taste of a higher odds strategy such as this.