Twitter Stock Jumps After Eyeing TikTok Purchase

Options traders are targeting calls today

Digital Content Manager
Aug 10, 2020 at 10:53 AM
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The shares of Twitter Inc (NYSE:TWTR) are up 1.9% at $37.84 this morning -- set to have their best day in more than a month -- after it was reported the social media giant expressed interest in buying U.S. operations of video-sharing platform TikTok. However, there remains skepticism about Twitter's ability to outbid Microsoft (MSFT) and finance the potential deal. A decision must come within the 45-day deadline U.S. President Donald Trump gave the application's Chinese owner, Bytedance, to agree to a sale before an executive order that effectively bans the app goes into effect.

On the charts, Twitter shares have completely recovered from their mid-March lows at the $20 level, nearly doubling in the last four months. The security's latest rally of $40.25 on July 23 was supported by the 20-day-moving average, which has contained most of the stock's pullbacks since June. As a result, TWTR currently sports a 27.1% lead quarter-to-date.

Despite the encouraging surge over the last few months, analysts are still hesitant toward the equity, with 22 of the 26 in question carrying a tepid "hold" rating. Meanwhile, the 12-month consensus price target of $36.26 is a 4.1% discount to current levels. Should Twitter stock keep climbing, it could prompt a shift in analyst attention. 

In the options pits, however, there is a voracious appetite for calls. In fact, 539,806 calls were exchanged in the past 50 days, as opposed to 193,342 puts. That bullish sentiment still rings true today. So far, 84,000 calls have crossed the tape -- four times the average intraday amount, and more than 10 times the number of puts traded. Most popular is the weekly 8/14 40-strike call, followed by the 39-strike call in the same series, with new positions being opened at both.

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