Wall Street awaits to see the kind of earnings that Twitter Inc. (NYSE:TWTR) will post as they are expected to have a huge bearing on the stock’s movement in the Market, which should also have an effect on Options Trades. CNBC’s, Dan Nathan, expects the stock to move by as much as 12% on either direction as the stock has been found to be extremely volatile in the recent past, on earnings report.
The put-to-call open interest ratio with regards to Twitter Inc. (NYSE:TWTR)’s stock is about the lowest ever, with nearly two calls open for each put option according to Nathan. Investors are betting big in the Options market with a $2 million bet on the stock already tabled. Most of the interest options positions are in calls signaling the bullish sentiments on the company.
“A very interesting bet on a day that call volume at that number Puts 2 to 1 when the stock was $40.30 the trader actually bought to close some January 2016. That is a year expiration 33 Puts and actually sold open 2500 of the January 2017. That is two years out 38 puts, and they did that 2500 times and here is the deal, they sold them for $8,” said Mr. Nathan.
What that means according to Nathan is that if Twitter Inc. (NYSE:TWTR) was to plummets to below the $38 trading mark by January 2017; the trader will be obligated to buy 250,000 shares at $38. The analyst notes that the trader may end up buying the stock for as low as $30 a share which is considered the stocks all-time low after the IPO.
Twitter Inc. (NYSE:TWTR) is up for the year by 12% and closing in on its 200 day moving average, which Nathan maintains could offer some sought of technical resistance. Better than expected monthly active users growth for the fourth quarter could trigger a surge of about $5 on the upside.
“I am long the stock, but I have actually collared the stock, I’ve sold some upside calls and bought some downside puts just to protect myself from this earnings event. I am a little nervous about what they report; my view my bullish view is longer term so I want to protect against the near term,” said Mr. Nathan.
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