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Twitter Inc (TWTR) Halo Lift Sparks Call Activity

Twitter Inc speculators are honing in on soon-to-expire call options

by 1/30/2014 1:42 PM
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Option Brief: Twitter Inc (NYSE:TWTR) is enjoying a Facebook Inc (NASDAQ:FB) halo lift today, with the shares up 8.1% at $64.25. What's more, some option traders are gambling on an extended ascent for TWTR through tomorrow's close.

The stock's most active option is the weekly 1/31 65-strike call, which has seen more than 5,400 contracts change hands. A slight majority of the calls crossed on the ask side, and volume has surpassed open interest at the strike, hinting at buy-to-open activity. By purchasing the calls to open, the investors expect TWTR to rally north of $65 by the end of Friday's session, when the options expire. The security soared as high as $65.24 in intraday action. Meanwhile, delta for the calls has jumped to 0.39 from 0.15 yesterday, implying a 39% chance of the contracts expiring in the money.

Those selling the calls to open, on the other hand, are likely betting on TWTR's rally to end today. If the stock finishes south of $65 tomorrow, the calls will expire worthless and the sellers can pocket the initial premium received from the sale. Fundamentally speaking, Twitter Inc (NYSE:TWTR) will issue its own -- and first ever -- public earnings report after the close on Wednesday, Feb. 5.


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