Bullish Options Bettors Keep Barraging Twilio Inc (TWLO)

Twilio Inc (TWLO) tagged yet another record high today

by Alex Eppstein

Published on Sep 23, 2016 at 3:07 PM

Wall Street rookie Twilio Inc (NYSE:TWLO) continues to look unstoppable on the charts, recently breaking out of a descending triangle pattern. In fact, the stock is fresh off a record high of $68.40, and was last seen up 0.9% at $65.49. Amid this bullish price action, options traders have been eager to place upside bets.

During the last four weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 4.43 TWLO calls for every put. Likewise, near-the-money open interest in the October series is decidedly skewed in the direction of calls. Specifically, the stock's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.24 indicates calls roughly quadruple puts.

It's more of the same today. Call options are trading at nearly triple the usual intraday clip, with 21,000 contracts on the tape -- dwarfing the less than 8,000 puts exchanged. What's more, potential buy-to-open activity is detected at the October 60 call, as speculators wager on TWLO extending its rapid run over the next four weeks.

At the same time calls have been popular, so too has short selling. Specifically, in the most recent reporting period, short interest exploded 45.5%, and now accounts for over 9% of Twilio Inc's (NYSE:TWLO) float. If the shares keep rallying, a short-squeeze situation could bolster buying power -- then again, some of these shorts may have already hedged their stock positions via protective calls.

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