Snowflake Stock: This Iron Condor Trade Is One Option Prospect

Snowflake (SNOW) is a popular stock with options traders, has a good upside and is also on the Investor’s Business Daily leaderboard. As a result, we are looking at an unbalanced iron condor for Snowflake, with a slightly bullish bias.

This can be achieved by trading more spreads than call spreads. As a reminder, an iron condor is a combination of a bull sell spread and a bear call spread.

First, we take the spreads in bull mode. Using the expiry date of November 21, we can sell put spreads at 210-200. This spread could be sold for about $1.90 per share in a 100-share contract this morning. Furthermore, selling two contracts would generate $380.

A bearish call spread is then placed by selling the 300 call and buying the 310 call. This spread was sold for about 75 cents per spread this morning.

Slight upward bias

Trading two spreads for each one call spread gives the trade a slight upward bias, but also more risk on the downside. In total, the iron condor will generate about $4.55, or $455, of premium.

The profit zone is between 207.73 and 304.55. Calculate this by taking the short strike of 300 and adding the premium received. On the downside, break even takes the short strike of 210 and subtracts half the credit received since doubling it on the bull spread.

The maximum risk is on the call side. It is simply the strike bid (10) less the premium received or $545. This is if Snowflake ends above 310 at expiration. The maximum risk is greater on the put side.

Since it is a double spread, the strike width is doubled (20) and then the premium received is subtracted. This means that this trade will lose $1,545 if the Snowflake trade ends up being less than $200 at expiration. Since this is a risk-limited trade, it now doesn’t matter how far it goes against you, a long call or long put will more than offset losses.

If we take the $455 premium divided by the maximum risk of $1,545, this iron condor trade has the potential to return 29%. Traders may consider a The stop loss in this case is based on 25% of the capital at risk, or about $380.

Snowflake Stock Reviews

Investor’s Business Daily presents Snowflake Stock A Composite evaluation Of 97 of the best 99 possible, and Earnings per share rating From 79 and a Relative strength rating From 90. According to IBD inventory checkSnowflake also ranks second in its group.

Snowflake results are scheduled to be released around November 19, so this trade contains profit risk if held until expiration.

Please remember that options are risky, and investors can lose 100% of their investment.

This article is for educational purposes only and is not a commercial recommendation. Remember to always do your due diligence and consult your financial advisor before making any investment decisions.

Gavin McMaster holds a Master’s degree in Applied finance and Investment. He specializes in income trading using options, and is conservative in his style. He also believes that patience in waiting for the best settings is the key to successful trading. Follow him on X/Twitter at @OptiontradinIQ.

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