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Twitter Call Volume Jumps on Bullish Citron Note

Citron: Twitter is 'irreplaceable' -- just ask Tesla's Elon Musk

Aug 13, 2018 at 3:36 PM
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Social media stock Twitter Inc (NYSE:TWTR) is higher this afternoon and attracting option bulls, after an upbeat note from Citron Research. The company said TWTR stock "will hit $52 within a year," and said the platform "has become all things media and an irreplaceable part of the global dialogue." Just look at President Donald Trump and Tesla (TSLA) CEO Elon Musk, Citron said, with the former tweeting on the regular (just ask Harley-Davidson) and the latter just last week using Twitter to announce hopes to take Tesla private.

Twitter stock was last seen 2.6% higher at $32.85, so a $52 price target represents expected upside of 58% to the stock's current perch, and is double its initial public offering (IPO) price of $26. A poorly received earnings report in late July sent the shares gapping lower, but the equity found multiple layers of support in the $30-$31 area, which is home to its 200-day moving average, represents a year-over-year gain of 100%, and is 20% above the IPO price. Today, the security is set to close above its 10-day trendline for the first time since that earnings report.

In the options pits, Twitter calls are flying off the shelves at twice the average intraday pace, with more than 180,000 contracts exchanged already. That's compared to just over 41,000 TWTR puts traded so far. The August 33 and 34 calls are most popular, with around 29,000 and 11,000 contracts traded, respectively. "Vanilla" buyers of the calls expect TWTR stock to extend its journey higher and top the strikes by the close on Friday, Aug. 20, when front-month options expire.

The social media concern has handily rewarded premium buyers in the past. The stock's Schaeffer's Volatility Scorecard (SVS) stands at a lofty 96 out of a possible 100, meaning TWTR has easily exceeded options traders' volatility expectations in the past 12 months.

 

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