Options Traders Pounce as Twitter Inc (TWTR) Stares Down Historic Losing Streak

Twitter Inc (NYSE:TWTR) stock is trying to avoid its worst losing streak in nearly a year

Dec 23, 2016 at 11:36 AM
facebook X logo linkedin

Shares of social media stock Twitter Inc (NYSE:TWTR) have underperformed in recent weeks, taking a dive since their near-term high of $19.84 from earlier this month. In fact, TWTR just wrapped up a seven-day losing streak, and an eighth straight loss would be the stock's longest losing streak since January. However, Twitter is fighting to avoid this fate, with the stock fractionally higher at $16.43. TWTR options volume is on the rise in the meantime, with calls and puts both trading at an accelerated rate.

To be more specific, put volume is running at twice the rate normally seen at this point in the day, with much of the activity centering around the February 13 put. While it's not entirely clear how options traders are positioning themselves here, it's possible sell-to-open activity is taking place. In other words, traders are betting on TWTR shares holding above $13 in the weeks ahead. 

Historically, call buying has dominated Twitter's options pits. The stock sports a 10-day call/put volume ratio 3.63, meaning almost four calls have been purchased for every put during the past two weeks. This ratio outranks roughly two-thirds of all others from the past year, too, so this bullish bias is unusual. In a similar vein, TWTR's Schaeffer's put/call interest ratio (SOIR) of 0.42 is just 7 percentage points from an annual call-skewed extreme, indicating near-term traders have rarely been more call-heavy in the past year. 

This seemingly hopeful outlook among options traders is certainly not shared by analysts. At the moment, 25 brokerage firms are covering the stock, and just four recommend buying TWTR. Plus, the shares' average 12-month price target of $17.02 represents just a 3.3% premium to current levels. 

Bullish or bearish, it's a prime time to buy near-term Twitter Inc (NYSE:TWTR) options. This is based off the stock's Schaeffer's Volatility Index (SVI) of 44%, which ranks below 96% of readings, going back one year. Said simply, the options market is pricing in unusually low volatility expectations right now for TWTR. 

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI