Snap Inc. (SNAP) Options Traders Brace for Q2 2025 Earnings with Bearish Bets at $57-$69 Range

Growing Put Options Signal Bearish Sentiment Ahead of Snap’s Q2 2024 Earnings

As Snap Inc. (NASDAQ: SNAP) approaches its Q2 2024 earnings release, investors have kept the stock price confined within a tight range, reflecting uncertainty about the company’s near-term outlook. Notably, the open interest in put options has been climbing, suggesting that options traders are hedging against or speculating on a potential decline in SNAP’s share price. Despite this bearish positioning, a better-than-expected earnings report could trigger a swift reversal, pushing shares higher.

A significant volume of put options with elevated premiums remains active, indicating traders' anticipation of a disappointing earnings outcome. Many investors have been buying puts and selling calls, betting on a downward move post-earnings. Yet, if Snap surprises the market positively, these bearish bets might unwind rapidly, creating upward momentum in the stock price.

Forecasting stock price direction after earnings is inherently challenging. However, juxtaposing stock price movements with option market activity reveals that a positive earnings surprise could propel SNAP shares toward or above their 20-day moving average within days of the announcement. This is because current option prices imply limited expected volatility, so any unexpected good news could catch traders off guard and result in a sharp price surge.

Key Insights

• SNAP shares have been range-bound between $57 and $69 leading up to earnings.
• The stock has recently closed below its 20-day moving average, hinting at bearish sentiment.
• Option pricing favors puts slightly over calls, signaling expectations of downward pressure.
• Volatility-based support and resistance levels suggest potential for significant movement in either direction.
• This environment creates a lucrative opportunity for traders to capitalize on an unexpected earnings result.

Options trading reflects market participants’ attempts to profit from or hedge against sudden price moves. By analyzing both stock price trends and option market data, traders gain deeper insight into market expectations and sentiment. The chart below illustrates SNAP’s price action leading into the earnings announcement.

Current Market Trends

Over the past month, SNAP shares have traded within a narrow band, peaking near $69 in early July and bottoming around $57. Technical indicators, including the 20-day Keltner Channel based on Average True Range (ATR), show the stock mostly fluctuating within an average range, reflecting investor caution. The recent dip below the 20-day moving average suggests growing bearish sentiment as the earnings date approaches.

Technical Analysis Tip

The Average True Range (ATR) is a widely used metric for assessing historical volatility. Typically calculated over 10 to 20 periods, ATR helps traders understand price fluctuations over recent weeks, providing context for current price movements.

As SNAP’s price trend has weakened recently, it’s crucial for traders to interpret whether this reflects genuine concerns about earnings or simply market noise. Option market data, showing a slight preference for puts over calls in open interest, suggests investors are bracing for less favorable news but remain uncertain about the magnitude of any move.

Additional Technical Insight

The Keltner Channel, constructed from a 20-day simple moving average and bands set by multiples of ATR, offers a clear visualization of volatility and potential support/resistance zones. This tool helps traders identify significant price boundaries and anticipate possible breakout or breakdown points.

Options Market Activity

Options traders have priced their bets expecting SNAP shares to close within two distinct ranges by July 23, shortly after the earnings release. The call options imply a 45% probability of the stock finishing higher within the green-framed price box, while put options suggest a 32% chance of a decline within the red-framed box.

Open interest data reveals approximately 766,000 call options versus 967,000 put options, indicating a modest bearish tilt. However, the near parity in option volumes and balanced strike price ranges imply that traders are uncertain about the direction of the move, expecting volatility but lacking conviction on upside or downside dominance.

Further, the 10-day Keltner Channel set at four times ATR highlights key support and resistance levels. These zones have historically correlated with significant price reactions, underscoring the potential for a sharp move depending on the earnings outcome.

The broad range between support and resistance suggests that unexpected earnings news—positive or negative—could trigger a substantial price swing. After the previous earnings release, SNAP shares dropped 7.45% the following day but recovered in subsequent weeks, surpassing pre-earnings levels. Investors appear to be anticipating a similar pattern this quarter, with ample room for volatility-driven moves.

Sector and Market Implications

While SNAP’s post-earnings price swings typically have limited impact on major indices, the earnings report could influence the broader Communication Services sector. A strong performance might boost related stocks like Meta Platforms, Inc. (META) and Alphabet Inc. (GOOG), as well as ETFs such as the Communication Services Select Sector SPDR Fund (XLC) and Vanguard Total Stock Market ETF (VTI).

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