Snap Inc. (SNAP)
Update 5/15/2017: SNAP gapped sharply to the downside after earnings were published and then rose for three subsequent trading days, partially mitigating the loss. I exited for a loss for a $3.75 debit.
Shares declined by 13.7% over five days, or a -1,003% annual rate. The options position produced a -15.7% loss on debiy for a -1,149% annual rate.
SNAP publishes earnings on Thursday after the closing bell.
I shall use the series of weekly options that trade for the last time eight days hence, on May 19.
Implied volatility stands at 74%, which is 7.4 times the VIX, a measure of the volatility of the S&P 500 index.
SNAP’s IV stands at its peak since the stock began trading publicly on March 2.
The price used for analysis was $23.03.
The premium is 49% of the width of the position’s wings.
The risk/reward ratio is 1:1.
Decision for My Account
I have entered a position on SNAP as described above. The stock at the time of entry was priced at $23.03.
By Tim Bovee, Portland, Oregon, May 10, 2017