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

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

Feb 3, 2015 at 3:18 PM
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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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