Notable Friday Option Activity: SMR, UPST, SNOW

Unusually high options activity was observed in Upstart (UPST) and Snowflake (SNOW): UPST saw 38,224 contracts traded (~3.8M underlying shares), about 51.4% of its one‑month average daily volume (7.4M), with the $75 call expiring March 20, 2026 accounting for 2,919 contracts (~291,900 shares). SNOW recorded 17,745 contracts (~1.8M shares), roughly 46.6% of its one‑month ADV (3.8M), led by the $257.50 call expiring November 28, 2025 with 1,277 contracts (~127,700 shares); the flows indicate concentrated bullish call positioning but are reported as descriptive market activity rather than company fundamentals.

Analysis

Market structure: Heavy one‑way call flow (UPST ~38k contracts ≈3.8M shares = 51% ADTV; SNOW ~17.7k contracts ≈1.8M shares = 46.6% ADTV) benefits options market makers, prime brokers and delta‑hedging desks who collect fees and force dynamic hedging; it signals concentrated demand for upside exposure rather than broad retail re‑risking. Equity holders of UPST and SNOW can benefit from temporary gamma‑driven squeezes; short‑volatility holders and thinly borrowed shorts are the obvious losers if hedging feedback amplifies moves.

Risk assessment: Tail risks include a regulatory shock to fintech credit (UPST) or a sudden enterprise IT spend cut that collapses SNOW multiples; a forced unwind by a large buyer could cause >20–30% intraday swings via gamma. Immediate (days) — IV and delta hedging will drive price action; short term (weeks–months) — premium decay and earnings releases will re‑price vols; long term (quarters–years) — fundamentals (loan performance for UPST, ARR growth for SNOW) dominate. Hidden dependencies: block trades may be spreads (delta‑neutral), stock borrow costs constrain short squeezes, and option flow may be client hedges rather than directional buys.

Trade implications: If flow is directional, long dated defined‑risk calls capture upside while limiting gamma risk — e.g., UPST Mar‑20‑2026 75/100 call spreads sized so max loss = 1–3% portfolio; SNOW Nov‑28‑2025 257.5/300 call spreads as a growth re‑rating play. If IV is elevated (IV rank >60%), sell premium with guarded iron‑condors 30–60 days out sized small (0.5% position risk) or buy calendar spreads to play reversion. Pair trade: long SNOW vs short IGV (software ETF) for relative strength capture, target 8–12% outperformance over 3 months.

Contrarian angles: Consensus assumes flows = directional conviction; history (2020–21) shows large call blocks are often structured spreads or delta‑hedged institutional positions — implied vol often reverts 20–40% after the initial move. Therefore be skeptical of lasting fundamental repricing unless ARR/loan metrics confirm; an overlevered short gamma seller can quicken gains and then reverse violently when they cover. Unintended consequence: aggressive IV selling by funds into these names could create a quick mean reversion window — a tactical opportunity to sell premium and re‑establish long dated exposure cheaply.

Key Decisions for Investors

• Establish a defined‑risk bullish position in UPST: buy Mar‑20‑2026 75/100 call spread sized so maximum portfolio loss = 1.5% (e.g., notional such that spread debit = 1.5% of portfolio). Take profit if UPST > 100 (+~33% from 75 strike) or close if underlying falls >25% intraday or IV drops >30% from entry.
• Take a tactical long in SNOW via Nov‑28‑2025 257.5/300 call spread sized 1.0% portfolio; trim half at +50% P/L and close full position if SNOW < 200 three months before expiry or if enterprise ARR guidance misses by >3 pts.
• If IV rank >60% on either ticker in next 10 trading days, sell 30–60 day iron‑condors on UPST and SNOW with 1.5–2.0 standard deviation wings, max position risk 0.5% each, and buy protection beyond worst case; roll or unwind if underlying moves >8–10% against the position.
• Execute a relative value pair: long SNOW vs short IGV (software ETF) sized to beta‑neutral exposure (target net 0 beta to broad market), horizon 8–12 weeks, stop if relative underperformance exceeds 8% to protect against sector‑wide drawdowns.