TWTR Shares Rise Despite Bear Note

Twitter's weekly 12/27 31-strike call has been popular

Dec 18, 2019 at 10:14 AM
facebook twitter linkedin

Twitter Inc (NYSE:TWTR) stock is up 1% at $31.01, even after Citigroup cut its price target to $36 from $45. The social media name is instead getting a boost from broader-market tailwinds, which should be good news for a number of TWTR options traders.

More specifically, calls have been very popular on Twitter, something we noted earlier this month, as well. In fact, the 10-day call/put volume at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has jumped to 7.45, a number that ranks near an annual high. What's more, the Schaeffer's put/call open interest ratio (SOIR) of 0.45 ranks in the bottom percentile of its annual range, showing an unusual call-skew among near-term speculators.

Part of this is due to the huge open interest at the far out-of-the-money January 2020 70-strike call, where roughly 170,000 contracts are open -- more than three times the next closest strike. Looking at the past 10 days in particular, the weekly 12/27 31-strike call has been popular, and data confirms substantial buy-to-open activity. As such, many traders are betting on TWTR shares moving higher above $31 through next Friday's close, when the contracts expire.

With Twitter shares nearing their 50-day moving average for the first time since the October bear gap, near-term options are actually attractively priced at the moment. The 30-day at-the-money implied volatility right now is 26.6%, which lands in the 1st annual percentile, showing low volatility expectations around TWTR.




These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!


Common mistakes options traders make


Special Offers from Schaeffer's Trading Partners