Reddit (RDDT) Surges 7.15% Intraday: What's Fueling the Volatility?

Summary
• RDDT rockets 7.15% to $226.2, piercing its 52-week high of $253.14
• Earnings beat of $0.45 EPS and 77.9% revenue growth drive institutional buying frenzy
• Options chain sees 220C and 225C contracts dominate turnover with 146% and 168% price change ratios

Reddit’s intraday surge has ignited a firestorm of technical and options activity, with the stock trading near its 52-week high. The move defies a short-term bearish engulfing pattern and a negative MACD crossover, suggesting a potential reversal in sentiment. Traders are now scrutinizing key levels and options liquidity to gauge the sustainability of this rally.

Earnings Beat and Institutional Buying Drive RDDT's Rally
Reddit’s 7.15% intraday surge is fueled by a combination of a 77.9% year-over-year revenue growth and a $0.45 EPS beat, surpassing analyst expectations of $0.20. Institutional investors like Greycroft LP and Vanguard Group have significantly increased their stakes, with Greycroft’s 109.1% position boost and Vanguard’s 11.1% share accumulation. The stock’s breakout above the 200-day moving average of $150.11 and a 5.74% price jump to $223.21 have triggered aggressive call options buying, particularly in the 220C and 225C contracts. However, conflicting signals emerge from a bearish MACD (-4.06) and RSI (49.5), hinting at potential volatility.

Social Media Sector Mixed as Reddit Outperforms META
While Reddit’s 7.15% gain dwarfs the sector leader META’s 0.45% intraday rise, the broader social media sector remains cautious. META’s muted performance suggests RDDT’s rally is stock-specific, driven by its earnings surprise and institutional inflows rather than sector-wide optimism. Reddit’s 9.1% ROE, though in line with industry averages, contrasts with META’s stronger growth trajectory, highlighting divergent investor sentiment.

High-Leverage Call Options and Key Technical Levels to Watch
• 200-day average: 150.11 (below); RSI: 49.5 (neutral); MACD: -4.06 (bearish); Bollinger Bands: 255.98 (upper), 216.71 (middle), 177.44 (lower)

Reddit’s price action near the upper Bollinger Band (255.98) and its 224.52 intraday high suggest a critical juncture. The RSI’s neutrality and MACD divergence imply a potential reversal, but the 220C and 225C options offer high leverage for bullish bets.

Top Option 1: RDDT20250905C220 (Call, $220 strike, 2025-09-05 expiry)
• IV: 53.30% (moderate) • Leverage: 19.80% • Delta: 0.660879 • Theta: -1.037956 • Gamma: 0.019287 • Turnover: 775,625
IV reflects moderate volatility, leverage amplifies returns, delta indicates directional bias, theta shows time decay, gamma highlights price sensitivity. A 5% upside to $237.51 yields a payoff of $17.51 (ST = $237.51). This contract’s high gamma and liquidity make it ideal for capitalizing on acceleration.

Top Option 2: RDDT20250905C225 (Call, $225 strike, 2025-09-05 expiry)
• IV: 54.34% (moderate) • Leverage: 26.03% • Delta: 0.557724 • Theta: -0.979011 • Gamma: 0.020405 • Turnover: 277,418
IV and leverage are balanced, delta suggests moderate directional bias, theta and gamma align with short-term volatility. A 5% upside to $237.51 yields a $12.51 payoff, with strong gamma to benefit from acceleration.

Aggressive bulls may consider RDDT20250905C220 into a break above $224.52 or RDDT20250905C225 for a controlled leveraged play.

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Reddit’s Rally: A Short-Term Bet on Volatility or a Setup for Reversal?
Reddit’s 7.15% surge has created a technical crossroads: a bullish breakout clashes with a bearish engulfing pattern and negative MACD. Traders must watch the 224.52 high and 212.48 low to determine if this is a short-term reversal or a consolidation phase. The sector leader META’s 0.45% gain suggests RDDT’s move is stock-specific. For now, high-gamma call options like RDDT20250905C220 and RDDT20250905C225 provide leveraged exposure to a potential continuation, but caution is warranted if the RSI (49.5) fails to cross 50 or the MACD (-4.06) turns negative. Action: Watch for $224.52 breakout or breakdown below $212.48. If the former, consider RDDT20250905C220 for aggressive upside; if the latter, pivot to short-term puts.