Most Active Options Update: Twitter Inc (TWTR)

Twitter Inc option bulls keep the faith

by Karee Venema

Published on Oct 29, 2014 at 2:12 PM
Updated on Apr 20, 2015 at 5:32 PM

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is microblogging concern Twitter Inc (NYSE:TWTR), as option traders keep the faith on the struggling stock.

Most Active Options Table

It's been a rough couple of days for Twitter Inc, which shed almost 10% yesterday following a poorly received earnings report and subsequent round of bearish brokerage notes. Today, the shares are down 3.6% to churn near $42.19, as a newly inked partnership with International Business Machines Corp. (NYSE:IBM) fails to spark excitement on the Street.

Not everyone is throwing in the proverbial towel on the stock, though. In the options pits, calls are trading at 1.2 times what's typically seen at this point in the day, and per the equity's 30-day at-the-money implied volatility (IV) -- which is up 2% to 44.9% -- short-term contracts are in demand.

Most active is TWTR's November 43 call, where 11,729 contracts have changed hands. The majority of these have traded at the ask price, IV is up 2.3 percentage points, and volume outstrips open interest, making it safe to assume new positions are being purchased. At last check, delta on the call was docked at 0.47, suggesting a roughly 1-in-2 chance the option will be in the money at the close on Friday, Nov. 21, when front-month options expire.

Should Twitter Inc (NYSE:TWTR) fail to reclaim its perch atop $43 by expiration, the most the speculators stand to lose is the initial premium paid. Good news for today's call buyers -- in the wake of Monday night's earnings report, TWTR's Schaeffer's Volatility Index (SVI) fell to 44% from 76%, and is now ranked lower than 87% of similar readings taken in the past year. Simply stated, premium on the stock's front-month options is relatively inexpensive at the moment.


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