Bulls Rally as Twitter, Inc. (TWTR) Unveils New Revenue Stream

Twitter Inc (TWTR) is higher today, after announcing plans to expand its ad network

by Karee Venema

Published on Feb 3, 2015 at 3:18 PM
Updated on Apr 20, 2015 at 5:32 PM

Twitter Inc (NYSE:TWTR) has popped 6.5% today to trade at $39.90, after the company unveiled plans to expand its ad network. Options traders are jumping on the stock, and are scooping up calls at a rate two times the average intraday pace. Meanwhile, TWTR's 30-day at-the-money implied volatility is up 3.2% at 68.4%, indicating increased demand for the equity's short-term options.

Specifically, the stock's weekly 2/6 40-strike call has received notable attention from near-term traders. According to data from the International Securities Exchange (ISE), a number of positions have been bought to open, as speculators bet on the stock to breakout above the round-number $40 mark by Friday's close -- when the series expires -- a time frame which includes Thursday night's quarterly earnings report.

Today's penchant for short-term calls more of the same in TWTR's options pits. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.59 ranks lower than 80% of similar readings taken in the past year, meaning near-term traders are more call-heavy than usual.

On the charts, today's surge bucks the equity's longer-term trajectory, with the shares off roughly 40% on a year-over-year basis. What's more, over the past four quarters, the stock has averaged a single-session post-earnings loss of 5.7%. On the plus side, should Twitter Inc (NYSE:TWTR) settle south of the strike at Friday's close, the most today's call buyers stand to lose is 100% of the premium paid.


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