Option Witch | Pinterest is Expected to Show a 10% Swing Post-Earnings, Two High-Volatility Strategies in Focus!

Pinterest is poised to report Q2 earnings Aug 7, expecting $975.6M revenue and $0.36 EPS, up 14.3% YoY but slower than last year’s 20.6% growth. Intense competition from Meta, Google, and Snap threatens Pinterest's ad-tech edge, while 90% ad-revenue dependence exposes it to macroeconomic shifts.

Option traders are pricing in a potential move of 10.5% in either direction following the earnings release. Investors may consider high-volatility options plays like straddles and strangles.

Things to Watch in Pinterest’s Q2 Earnings

Pinterest faces a crowded battlefield. $Meta(META)$, $Google(GOOGL)$, and $Snap(SNAP)$ are all investing heavily in AI-driven recommendation systems and shoppable content. For instance, Meta's recent rollout of AI-powered ad targeting and Snap's AR shopping lenses pose direct threats to Pinterest's ad-tech ambitions.

The company's reliance on advertising revenue—accounting for over 90% of its top line—exposes it to macroeconomic risks. The current farcical reciprocal tariff regime could prove extremely detrimental to digital advertising demand. As an experimental channel, advertisers are likely to cut their budgets on Pinterest.

Looking at Pinterest’s peers in the social networking segment, some have already reported their Q2 results, giving us a hint as to what we can expect. $Reddit(RDDT)$ delivered year-on-year revenue growth of 77.7%, beating analysts’ expectations by 17.2%, and $Meta(META)$ reported revenues up 21.6%, topping estimates by 6%. Reddit traded up 16.9% following the results while Meta was also up 11.2%. $Snap(SNAP)$ shares tumbled more than 17% after reporting second-quarter revenue growth that was the slowest in more than a year, hurt by a temporary glitch in its advertising platform.

Analysts are betting on continued gains driven by Pinterest's monetization strategies and performance-based advertising tools like Performance+, which leverage AI.

Guggenheim's Michael Morris just raised his price target to $44, citing growing partnerships with Amazon, Alphabet's Google, Instacart, and Magnite. Benchmark's Mark Zgutowicz bumped his target to $48, pointing to new AI and GPU-powered innovations and expanding advertiser base.

Options Traders Anticipate a 10% Move

The expected move for PINS options expiring on Aug 08, 2025 (1 days) (w) is ±$4.10 (10.48%), with a price range of $35.08 - $43.29.

Source: OptionCharts

Call open interest expiring this Friday totals 35,607, while puts stand at 13,387 — indicating bullish tilt among options traders.

Source: OptionCharts

Open interest for $45 and $42 calls expiring this week are particularly high, with 10,026 and 9,626 unclosed contracts as of Wednesday.

Source: OptionCharts

Option Strategy

1. Straddle Strategy (ATM)

Structure: Buy ATM Call + ATM Put

• Strikes: $40 (near current price, inferred from options chain)

• Call Premium: ~$1.95 (40 CALL mid-price)

• Put Premium: ~$2.74 (40 PUT mid-price)

• Total Cost: $4.69 per straddle

$PINS Straddle 250808 40.0C/40.0P$

Breakeven Prices:

• Upside: $40 + $4.69 = $44.69

• Downside: $40 - $4.69 = $35.31

Profit Scenario:

• Requires a >11.7% move ($4.69 / $40) in either direction.

• A 10% move ($4) would result in a small loss (~$0.69/share).

Rationale:

• High IV (90-100%) inflates premiums, but earnings volatility could justify the cost.

• Best for traders expecting a >12% move or hedging against directional uncertainty.

2. Strangle Strategy (OTM)

Structure: Buy OTM Call + OTM Put

• Strikes: $42 CALL + $38 PUT (~5% OTM)

• Call Premium: ~$1.22 (42 CALL mid-price)

• Put Premium: ~$1.75 (38 PUT mid-price)

• Total Cost: $2.97 per strangle

$PINS Strangle 250808 38.0P/42.0C$

Breakeven Prices:

• Upside: $42 + $2.97 = $44.97

• Downside: $38 - $2.97 = $35.03

Profit Scenario:

• Requires a >12.4% move ($4.97 / $40) to profit.

• A 10% move ($4) results in a small loss (~$0.97/share).

Alternative Strike Selection: For a 10% move target, use $41 CALL + $39 PUT :

• Cost: ~$1.56 (41 CALL) + ~$2.05 (39 PUT) = $3.61

• Breakeven: $44.61 (up) / $35.39 (down).

Rationale:

• Lower upfront cost vs. straddle, but requires a larger move to profit.

• Suitable for traders prioritizing capital efficiency and willing to accept higher breakeven thresholds.