Options Traders Buy Twilio Calls Amid Ongoing Stock Surge

Twilio Inc (TWLO) call options are trading at five times the expected intraday pace

Feb 9, 2017 at 1:11 PM
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Twilio Inc (NYSE:TWLO) is surging for a second straight session, following Tuesday night's earnings beat and a subsequent round of bullish analyst notes. At last check, the cloud communications stock has jumped 5.2% at $33.07, on track for its first-ever close north of the 80-day moving average. Earlier, in fact, TWLO shares touched a year-to-date high of $34.24, with stock volume in the 98th annual percentile. Options trading, meanwhile, is also transpiring at an accelerated rate.

By the numbers, more than 42,000 TWLO options are on the tape -- five times the expected intraday clip. Amid this spiking demand, the stock's 30-day at-the-money implied volatility touched an annual low earlier at 53%. Calls more than quadruple puts, and buy-to-open activity is detected at the weekly 2/10 32.50-, 33.50-, and 34.50-strike calls. In other words, options traders anticipate additional gains through tomorrow's close, when the series expires.

This propensity toward bullish betting echoes what's been transpiring at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, TWLO has racked up a 10-day call/put volume ratio of 3.51, with long calls more than tripling puts. 

It's more of the same when narrowing in on near-the-money strikes in the February series. TWLO features a front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.19, indicating calls quintuple puts. Drilling down, peak front-month open interest resides at the now in-the-money February 30 and 32 calls, where the major exchanges confirm an abundance of newly purchased positions.

What's more, it's an opportune time to scoop up near-term options. Twilio Inc's (NYSE:TWLO) Schaeffer's Volatility Index (SVI) rests at a 12-month low of 52%. In other words, the options market is currently pricing in low short-term volatility expectations, from a historical perspective.

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