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Most Active Options Update: Twitter Inc (TWTR)

Twitter Inc option traders are unconvinced of today's bounce

by 3/27/2014 2:50 PM
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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).


After falling to their lowest level since early December this morning, shares of Twitter Inc are back in the black this afternoon. At last check, the equity was up 3.5% to linger near $45.97, amid expectations the microblogging site will soon announce a new approach to gain a foothold on the music scene. This bounce may have been in the cards, though, considering the equity's 14-day Relative Strength Index (RSI) has dropped to 27.80 from its Feb. 28 close of 42.70, amid TWTR's 16.3% month-to-date decline. In other words, the stock is sitting in oversold territory.

Meanwhile, in the options pits, traders are seemingly unfazed by today's rebound, and are scooping up puts at a 49% mark-up to the intraday average. The most active position is TWTR's weekly 3/28 45.50-strike put, where 3,217 contracts have changed hands -- 82% at the ask price. Implied volatility is 3.2 percentage points higher, and volume is outstripping open interest, indicating the purchase of new bearish positions.

Although Twitter Inc (NYSE:TWTR) fell to an intraday low of $43.31 right out of the gate today, delta for the put is perched at negative 0.33, suggesting a 1-in-3 chance of an in-the-money finish at Friday's close, when the options expire. Should TWTR stay north of the strike through the remainder of this session and next, though, the most the speculators stand to lose is the initial premium paid. According to Trade-Alert, the volume-weighted average price for the puts is $0.51.


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