TWTR Shares Rise Despite Bear Note

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

by Josh Selway

Published on Dec 18, 2019 at 10:14 AM

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.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.
Stocks Surge During Holiday-Shortened Week
Stocks chugged higher as the government responded to the coronavirus crisis with more funding
Bank Stocks Ease Investors Back Into Earnings Season
Bank stocks will kick off earnings season next week
The Top Lithium Play of 2020
Click to continue to advertiser's site.