Don't Sweat That Twitter Stock Selloff

A shift in analyst sentiment could sends shares higher still

May 26, 2021 at 11:35 AM

TWTR

Shareholders of social media giant Twitter Inc (NYSE:TWTR) are gearing up for their annual meeting, set to take place on Thursday, May 27. The Facebook (FB) rival has now pulled back to its year-to-date breakeven mark, an area that is home to previous highs. Further, the equity recently experienced a 50% Fibonacci retracement from its pandemic March bottom to its February 2021 peak, which also aligns with support at the 200-day moving average. With these technical layers in place, now looks like the perfect time to buy TWTR calls.

There also looks to be plenty of room for analyst sentiment to improve, as 17 of the 27 in coverage rate the equity a "hold" or worse. In other words, an optimistic shift from the brokerage bunch could provide additional tailwinds. Meanwhile, short interest has increased 42% of the last three months, and Twitter stock has moved higher during that time period.

The security is sporting attractively priced premiums at the moment, too. TWTR's Schaeffer's Volatility Index (SVI) of 41% stands higher than only 2% of all other readings from the past year. What's more, its Schaeffer's Volatility Scorecard (SVS) sits at 95 out of a possible 100, indicating the stock has managed to exceed these volatility expectations over the last 12 months.

Our recommended call has a leverage ratio of 5.3, and will double on a 19.2% pop in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this TWTR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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