Trade Alert 7/26/2024

We own a call butterfly in SNAP that has been going the wrong way. We have added a 1×2 put spread today. This is a trade that profits from a downside move in the stock. However, the lower put is “naked” and thus requires that we would be willing to own 100 shares if the stock goes down dramatically. The details are shown below. Bought to open:  SNAP Aug 16th (monthly) 13.00 strike put (ratio of 1) Sold to open:  SNAP Aug 16th (monthly) 11.00 strike put (ratio of 2) Debit: 0.33 Max Reward = 1.67 or $167.00 per spread Likely Risk = 0.33 or $33.00 per spread Max Risk = Buying 100 shares but at a cost basis of 9.33 per share