Red-Hot Twitter Attracts Options Traders Ahead of Presentation

While the rest of the stock market has suffered in February, TWTR has been on fire

by Andrea Kramer

Published on Feb 13, 2018 at 1:23 PM

Twitter Inc (NYSE:TWTR) is expected to present at the Goldman Sachs Technology and Internet Conference at 3:30 p.m. ET today. Ahead of the event, TWTR shares are muscling notably higher yet again, and call options on the social media stock are flying off the shelves.

So far today, roughly 107,000 TWTR calls have changed hands -- about 1.5 times the norm for this point in the session, and more than twice the number of TWTR puts traded. The February 33 and 34 calls have seen notable volume, with possible buy-to-open action at the strikes. Speculators purchasing the calls expect Twitter shares to muscle atop the strikes by Friday's close, when the options expire.

However, the most active option so far is the March 37 call, where it looks like one speculator may have sold to open a block of nearly 7,700 contracts. If so, the trader expects TWTR stock to remain south of $37 through the close on Friday, March 16, at which point the calls will expire worthless and the speculator can keep the initial premium received for the calls -- roughly $531,000 ($0.69 per contract x 100 shares per contract x 7,698 contracts).

Today's appetite for short-term calls runs counter to the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.81, which is higher than 99% of all other readings from the past year. This indicates that while short-term TWTR calls outnumber puts on an absolute basis, near-term speculators have rarely been more put-biased during the past 12 months.

On the charts, Twitter stock has been outstanding of late, flying in the face of broad-market headwinds. While the rest of the stock market seemingly collapsed in February, TWTR is pacing for its best month since December 2013, up 29.1% so far, thanks to a well-received earnings report last week. At last check, the security was up 7.7% to trade at $33.32 -- set for its highest close since July 2015.


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