Unusual Options Activity in Bank of Twitter $TWTR

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• Hi, My name is Steve and Im with Options Trading
  Research, today were reviewing our recently
  published article

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Unusual Options Activity in Bank of Twitter TWTR
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As many of you know, unusual options activity can
be a valuable indicator as to what traders are
thinking, and more importantly, where these
stocks are heading in the short-term.
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This is something professional options traders
pay a lot of attention to, and for good reason
Unusual options activity can tip off big moves
in a stock, either up or down. So lets take a
look at some interesting activity that caught
our eye this week
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Twitter TWTR is the worlds largest
micro-blogging site. The companys immensely
popular social media site has over 300 million
users. For a good description of the company,
follow the link.
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TWTR is trading at 36.49 at market close, down
3 for the year. Thats 35 below the 52-week
high, and 9 from the 52-week low.
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So what does unusual options activity in TWTR
tell us?
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Very few stocks are as much of a lightning rod as
Twitter. The company is extremely popular, both
among users and investors. The site has hundreds
of millions of active users, and has become the
go-to spot for breaking news.
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Its also heavily utilized for social interaction
among users. However, the companys business
model leaves something to be desired. While
revenue growth has improved, user growth has
slowed down.
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The company still has a long way to go to
consistently generate profits. Monetization of
TWTRs users has been a real challenge so
far. Heres the deal
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This week, a trader bought a large block of
long-term calls on TWTR. Keep in mind, a call
option makes money when the underlying stock goes
up.
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More specifically, a trader purchased about 5,900
January 2017 35 calls for 7.75. The total cash
outlay for the calls was more than 4.5 million
which is also the max loss. Breakeven point for
the trade is 42.75.
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Long-term calls like this are generally called
LEAP options. LEAPs tend to be more investments
than trades. Its a cheaper method of getting
long large amounts of the stock without having to
pay up for the stock itself.
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Because the options dont expire until 2017, the
in-the-money calls (like these) tend to act just
like the stock would. Heres the chart of TWTR
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As you can see, TWTR has been quite volatile over
the last year, with several large moves.
Recently, the stock broke above the 50-day moving
average. In fact, this chart is showing the
reaction to the stock after todays earnings
release, which is very positive so far.
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That LEAP call purchase looks to be very
well-timed! Ultimately though, an investor isnt
buying LEAP options for a short-term move.
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This investor is either looking for a long-term
position in TWTR, or is cashing in on an earlier
trade (short calls). The 35 strike did have a
fair amount of open interest, so this could be
someone ringing the register ahead of earnings.
Either way, its generally a bullish sign for the
stock.
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More Options Trading Ideas Keep in mind,
theres a lot more unusual options activity going
on than what we discuss here.
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We just try to bring you what we feel are the
most significant ones and the ones you might
actually be able to make some money on!
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