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Snowflake into earnings: Earn $700 through cash secured puts
Snowflake Inc. (NYSE: SNOW) is scheduled to report earnings on 2 September 2026. Current analyst expectations are for approximately US$0.45 earnings per share (EPS) and roughly US$1.5 billion in revenue. Recent earnings reports have generally exceeded analyst expectations, including the previous quarter when Snowflake reported EPS of US$0.39 versus expectations of approximately US$0.32.
What is a Cash-Secured Put?
A cash-secured put is an options strategy where you sell a put option and receive a premium upfront.
In exchange for receiving that premium, you accept the obligation to buy 100 shares at the strike price if the option holder exercises the contract. Because you may need to purchase the shares, you set aside enough cash to fund the potential purchase. This is why the strategy is described as "cash-secured".
Many investors use cash-secured puts when they would be happy to own a company at a lower price than the current market price and would like to earn option premium while waiting.
A cash secured put example with Snowflake
Suppose you'd be happy to buy Snowflake shares, but only if they fell to a lower level than the current market price.
You could sell a 4 September 2026 put option with a US$300 strike price.
Key figures:
- Current share price: US$331.43
- Put strike price: US$300
- Option premium received: US$7.00 per share
- Contract size: 100 shares
- Premium received upfront: US$700
- Cash set aside: US$30,000
Because you receive US$7.00 per share in premium, your effective purchase price would be:
US$300.00 − US$7.00 = US$293.00 per share
This means your break-even point is approximately US$293.00.
If Snowflake remains above US$300 at expiry, the option would generally expire worthless and you keep the premium.
How Could This Play Out?
At option expiry | Share price | What happens | Result |
Above strike | US$320 | Put expires worthless | Keep the full US$700 premium. No shares purchased. |
Slightly below strike | US$295 | Shares assigned at US$300 | Buy 100 shares for US$30,000. Effective cost is US$293 per share after premium. Position shows a small unrealised gain of about US$2/share. |
Significantly below strike | US$250 | Shares assigned at US$300 | Buy 100 shares for US$30,000. Effective purchase price remains US$293, but the position would show an unrealised loss because the market price is well below break-even. |
What Are The Risks?
The primary risk is that Snowflake's share price falls significantly after earnings.
Recent market coverage has focused on several themes, including growth in cloud-data spending, adoption of artificial intelligence products, expansion of large enterprise customers, and the company's ability to maintain strong revenue growth. Investors are also watching customer spending patterns, guidance for future quarters, and whether AI-related demand continues to support consumption growth.
For a cash-secured put seller, a disappointing earnings report, weaker guidance, slowing customer growth, reduced enterprise spending, or lower-than-expected AI adoption could lead to a sharp decline in the share price.
There is also assignment risk. If the shares are below the strike price at expiry, you may be required to buy the shares regardless of how far the market price has fallen.
Finally, the premium received is limited, while the downside risk can be substantial if the stock experiences a large post-earnings decline.
Why Might This Appeal To A Long-Term Investor?
Some long-term investors use cash-secured puts because they would like to own a company, but only at a lower entry price.
Instead of placing a limit order and waiting, the investor receives premium income immediately. If the option expires worthless, the premium is retained. If the shares are assigned, the investor acquires the stock at an effective cost below the strike price.
For investors who already have a target purchase price and are comfortable owning the shares through market fluctuations, a cash-secured put can be one way to potentially generate income while waiting for an opportunity to buy.
Key Definitions
Strike Price
The price at which the put seller may be required to purchase shares.
Premium
The amount received upfront for selling the option.
Assignment
The process whereby the option seller is required to fulfil the obligation to buy shares.
Expiry
The final date on which the option contract remains active.
Break-Even Price
The strike price minus the premium received. In this example: US$293.00.
Cash-Secured
Having sufficient cash set aside to purchase the shares if assignment occurs.
Delta
An options sensitivity measure. The selected put has a delta of approximately-0.22, indicating a lower probability of finishing in-the-money than a put with a larger absolute delta.
Open Interest
The number of outstanding option contracts. The selected contract has open interest of approximately 1,157 contracts, indicating existing market activity in that strike.