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Most Active Options Update: Twitter Inc (TWTR)

Eleventh-hour traders flock to Twitter Inc's options pits

by 2/20/2014 2:22 PM
Stocks quoted in this article:

The 20 stocks listed below have seen 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 seeing a decent amount attention from last-minute traders is Twitter Inc (NYSE:TWTR).


Facebook Inc's (NASDAQ:FB) $16 billion acquisition of messaging start-up WhatsApp has reverberated across the social media sector today. Twitter Inc (NYSE:TWTR) is up nearly 2% this afternoon at $56.45, and options speculators have responded to this move by targeting extremely short-term options.

With roughly two hours left in the trading day, eight of the 10 most active TWTR options are in the February series, meaning they expire at tomorrow's close. Garnering noble attention on the opening side are the February 54 put and February 57 call. Both have seen the majority of today's volume trade at or near the ask price, and volume exceeds open interest. In short, it appears that new positions are being added to these strikes, as divergent bets for a pullback in the stock and a continued rally, respectively.

Those scooping up the front-month puts are looking for TWTR to retreat south of $54 by tomorrow at 4 p.m. ET. Traders opting to purchase the aforementioned calls believe TWTR will keep advancing through Friday's closing bell, overtaking the $57 level. Whatever the outcome, both put and call buyers risk only 100% of the premium paid for their contracts.

During the past couple of weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), demand for long calls has dipped, relatively speaking, compared to puts. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.33 (reflecting that calls have been bought to open over puts at a 4-to-3 pace) has fallen from 1.75 on Feb. 6 (the day after the company's earnings report).


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