Put Traders Pounce as Twitter Inc (TWTR) Pans Record Low

Twitter Inc (TWTR) is fresh off an all-time low

by Alex Eppstein

Published on May 3, 2016 at 3:19 PM
Updated on May 3, 2016 at 3:19 PM

Twitter Inc's (NYSE:TWTR) technical woes show no signs of abating. The social media stock earlier touched a record low of $13.90, and was last seen down 2.4% at $14.05. The losses have been especially severe in recent sessions, following TWTR's poorly received earnings reports. From the looks of it, however, at least one group of options traders anticipates the bleeding will soon stop.

Put options are changing hands at a slightly accelerated rate today, and the most active strike is the May 13.50 put. However, it appears at least some of these out-of-the-money options are being sold to open -- a theory confirmed by data from the International Securities Exchange (ISE). By selling the puts, the traders are counting on TWTR maintaining a foothold above $13.50 over the next three weeks, prior to expiration at the close on Friday, May 20.

Put writing has been a popular over the last 10 sessions at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). By the numbers, 53,443 contracts have been sold to open, versus 20,738 bought to open.

Looking at options trading activity from another angle, plenty of speculators appear to be betting on gains for Twitter Inc (NYSE:TWTR). Specifically, the stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 3.11 ranks just 6 percentage points from an annual high. That said, it should be noted that over 55 million shares are sold short, so it's possible short sellers have been hedging their bearish bets with long calls.

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