Snap Your Fingers Break The Highs
Here's the chart for Snap $SNAP:
Steve Strazza had this to say about $SNAP:
We continue to be impressed by the relative strength and resilience from this name during the market’s recent pullback.
Like we said earlier in the month, we want to buy SNAP on a breakout above 26 with a 2-4 month target at 37. We’re not quite there yet, but be ready as this move can happen any day now.
Looking across the options chains in January, the 35 strike calls have some nice open interest as well as some juicy premium to sell into which will help us lower the cost of buying some slightly out-of-the-money calls.
Here's the Play:
I'm buying a $SNAP January 27/35 Bull Call Spread for an approximately $2.15 debit. This means I'll be long the January 27 calls and short an equal amount of 35-strike calls. This debit represents the most I can lose if this trades goes south (or sideways).
If $SNAP closes below $23/share at any time during my hold, I'll attempt to close this spread to minimize my losses, if possible. Given that my risk is defined and I'm accepting the potential of a 100% loss of invested capital if wrong, I'm not going to sweat this exit.
On the flip side, if $SNAP makes a run for our price targets, we'll have an opportunity to close this spread for $4.60 or better. This would represent a more than doubling of our invested capital and I'd be taking profits when I've achieved a little less than 50% of the maximum potential profit in the profit-capped trade. I'd rather take my profits and run, than stick around waiting for January expiration and leaving myself exposed to further market volatility.
If you have any questions on this trade, please send them here.
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