Options Corner: SNOW Ahead of Earnings

Core Insights - Snowflake has shown strong performance, up approximately 47.5% over the past year, significantly outperforming the tech sector and the S&P 500 [2] - The stock is currently positioned between notable price levels, with a best close at 271.26 and a gap opening around 253, indicating potential areas of interest for traders [4] - The Relative Strength Index (RSI) is improving, indicating bullish momentum, while volume profiles suggest significant trading activity around 245 and 270 [5] Technical Analysis - The stock has broken its upward trend line and is now in a range between two key price areas, suggesting a period of consolidation [3] - Moving averages indicate critical support levels, with the 21 and 5-day exponential moving averages intersecting around 253, and the 63-day EMA at approximately 244 [4] - The bullish call diagonal strategy proposed involves buying December 19th 260 strike calls and selling December 5th 285 strike calls, taking advantage of volatility dispersion [8][9] Options Strategy - The proposed options strategy is a bullish call diagonal with a $25 width, requiring a debit of approximately $12.50, with profitability expected above 265 [10][12] - The strategy capitalizes on the difference in implied volatility, with the December 19th calls at 73% and the December 5th calls at 130%, allowing for potential rolling of the short option as expiration approaches [11] - The apex of profitability is anticipated around a one standard deviation move of approximately $23, indicating a bullish outlook for the stock [12]