Subscribers to Schaeffer's Weekend Trader options recommendation service received this SNOW commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
Snowflake Inc (NYSE:SNOW) stock’s breakdown from its consolidation period is taking down pre- and post-earnings lows. The 130-strike could also act as magnet going forward, with stacked puts now running lower, making this a great opportunity to initiate a short position.
Analysts lean bullish toward SNOW, with 38 of the 44 firms in coverage sporting "buy" or better ratings. In other words, the equity looks ripe for a round of downgrades, which could add pressure.
An unwinding of optimism in the options pits could create even more headwinds. This is per SNOW’s 50-day call/put volume ratio of 2.44 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). That ratio is already trending lower and is far from washout levels.
What’s more, the security’s Schaeffer's Volatility Scorecard (SVS) comes in at an elevated 71 out of 100. In other words, shares have consistently realized higher volatility than its options have priced in over the past 12 months.
Our recommended May put has a leverage ratio of 4.8 and will double on a 17.4% drop in the underlying equity.
