Can 'Curator' Turn Twitter, Inc. (TWTR) Around?

Twitter Inc (NYSE:TWTR) has a rough 2015, but traders seem optimistic about its new Curator feature

by Josh Selway

Published on Jun 19, 2015 at 3:18 PM

It's been a rocky year for Twitter Inc (NYSE:TWTR). Things started well enough for the shares, as they were up more than 44% as of April 27. Things turned south, however, when the company's first-quarter earnings leaked early, and since the stock's subsequent 25.7% bear gap on April 28, TWTR has been trending lower -- and touched an annual low of $33.51 earlier this week. 

Today, however, the shares are up 4.2% at $36.11, amid lingering M&A rumors and after the company said it's testing Curator, a new platform that will make it easier for publishers to track users' tweets about their content, while also allowing users to make purchases using interactive features.  What's more, the stock is attempting to claw its way into the black year-to-date.

Judging by today's price action, traders are applauding the e-commerce feature, the first major change since Dick Costolo stepped down as the company's CEO. Option traders, too, seem bullish, as more than 200,000 calls have crossed today, compared to just 68,000 expected. And, even with June options expiration on the horizon, some speculators are apparently opening new bullish bets.

The most active is the weekly 6/26 36-strike call, which it appears traders are purchasing to open, expecting TWTR to extend its gains above $36 before the contracts expire at the close next Friday. 

Now is an opportune time to grab some TWTR options, too, judging by its Schaeffer's Volatility Index (SVI) of 34%, which ranks in the 11th percentile of its annual range. In other words, the stock's short-term options are attractively priced right now, from a volatility standpoint. Plus, TWTR's Schaeffer Volatility Scorecard (SVS) of 96 indicates the stock has tended to make outsized moves, compared to what the options market has priced in during the past year. 

Today's focus on calls isn't a new phenomenon, though, as Twitter Inc's (NYSE:TWTR) short-term option traders were more call-skewed than usual coming into today, according to its Schaeffer's put/call open interest ratio (SOIR). This reading of 0.58 is lower than four-fifths of all others taken in the past year. 


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