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Most Active Options Update: Twitter Inc (TWTR)

Twitter Inc sees a surge of call activity, as the stock hits a new high

by 12/26/2013 2:29 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Twitter Inc (NYSE:TWTR).

Most

Another day, another new high for Twitter Inc, and the burst of positive price action has not been lost on option traders. At last check, roughly 515,000 calls have changed hands on TWTR, or nearly 12 times its average intraday pace. (The microblogging firm's overall options volume of 725,000 contracts easily makes it the most sought-after stock today.) Against this backdrop, TWTR's 30-day, at-the-money implied volatility (IV) has soared 39.7% to 107.0%. To illustrate just how in demand these options have been of late, this metric stood at 53.5% on Dec. 11.

About two-thirds of today's activity has centered at the January 2014 85, 90, and 95-strike calls, where a healthy portion of the collective 209,024 contracts traded have done so on the ask side. Volume outstrips open interest at each out-of-the-money strike, and data from the International Securities Exchange (ISE) confirms buy-to-open activity. Based on current trading levels, an in-the-money finish at each of the three strikes would require a move of 16.1%, 22.9%, and 29.7%, respectively. Should the stock remain below the strike prices through expiration, the most any of today's bulls stands to lose is the initial premium paid. According to TWTR's Schaeffer's Volatility Index (SVI) of 70%, which ranks in the highest percentile of the equity's short lifespan, the equity's short-term options are relatively pricey at the moment.

As touched upon, Twitter Inc (NYSE:TWTR) is having a standout session, with the shares tagging a new record peak of $74.73 earlier, before paring back to their present perch at $73.23.


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