Analyst: Twitter Stock a Top Idea In 2018

TWTR options traders have preferred calls over puts

Patrick Martin
Dec 18, 2017 at 9:38 AM
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Twitter Inc (NYSE:TWTR) stock is up 5.1% to trade at $23.36, a new annual high, after the social media stock received an upgrade to "overweight" from "neutral" at J.P. Morgan Securities, as well as a price-target hike to $27 from $20 -- in territory not charted since late 2015. The analysts believe Twitter is on track for continued double-digit average user growth in 2018, and called it one of their top ideas in 2018. In addition, Summit Redstone initiated coverage on TWTR stock with a "buy" rating and a price target of $26.

It's been an excellent year for TWTR stock, which has gained 43% in 2017, and 38% in the fourth quarter alone. The shares' rising 10-week moving average has guided the micro-blogging stock higher since early September.

Options traders have preferred Twitter calls over puts by a much bigger-than-usual margin amid the stock's recent uptrend. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TWTR's 10-day call/put volume ratio of 8.22 ranks 2 percentage points from an annual high. 

Short-term options buyers are scooping up Twitter options at a relative bargain, too. TWTR's Schaeffer's Volatility Index (SVI) of 36% ranks in the 13th percentile of its annual range, pointing to relatively muted volatility expectations at the moment.

 
 

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