Hedge Fund Cuts Twitter, Apple Stakes

TWTR and AAPL are down sharply after Einhorn's hedge fund exited its position

by Josh Selway

Published on Oct 5, 2018 at 2:45 PM

Rising bond yields are weighing on stocks, erasing the Dow's weekly gains in the process. Three notable stocks trading lower are social media concern Twitter Inc (NYSE:TWTR), electric automaker Tesla Inc (NASDAQ:TSLA), and iPhone maker Apple Inc. (NASDAQ:AAPL). Here's what's moving shares of TWTR, TSLA, and AAPL.

Greenlight Capital Closes Out of TWTR

TWTR stock is trading up 0.4% at $28.34, even after news that David Einhorn's hedge fund, Greenlight Capital, exited its position in the third quarter, citing regulatory concerns. The shares are now trading right above the 320-day moving average, a trendline not touched since last October.

It's been a rough run for Twitter since its June peak of $47.79, but near-term options traders remain convincingly call-skewed, according to the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.68. Longer-term traders have targeted calls, too, with peak open interest sitting at the January 2019 37-strike call.

Musk Tweet Sends TSLA Lower

TSLA is again front and center, down 7.5% to trade at $260.63, extending a recent sell-off following a meet-up with its 200-day moving average earlier this week. The move lower comes after CEO Elon Musk again took to Twitter, this time to refer to the Securities and Exchange Commission (SEC) as the "Shortseller Enrichment Commission" in reaction to his yet-to-be-approved settlement with the SEC. What's more, David Einhorn, who's short the stock, compared the company to Lehman Brothers, writing to investors that "deception is about to catch up to TSLA."

Tesla shares are trading just above the $250-$260 range that's contained previous pullbacks this year, but many options traders may be hoping for more losses, since there's been unusual put buying on the equity in recent weeks. Specifically, the security's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 0.99, which ranks in the 79th annual percentile.

Trade Uncertainties Scare Greenlight From AAPL

Einhorn's Greenlight Capital also closed its AAPL position, sending shares of the tech stock down 1.7%. to $224.05, adding another down day to a typically strong month. Einhorn's firm cited trade uncertainties between the U.S. and China as the reason for selling Apple. The security has already pulled back quite a bit since its record high of $233.47 on Oct. 3, but remains up 44% year-over-year.

It looks as though near-term options traders may be properly positioned for a pullback, though. This is according to AAPL's SOIR of 1.16, ranking in the 84th annual percentile, confirming an unusual put-skew among those targeting options that expire over the next three months.


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