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Hi, My name is Steve and I‘m with Options Trading Research, today were

reviewing our recently published article…

Unusual Options Activity in Bank of Twitter $TWTR

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.

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 let’s take a look at some ‘interesting’ activity that caught our eye this week:

Twitter $TWTR is the world’s largest micro-blogging site. The company’s

immensely popular social media site has over 300 million users.

For a good description of the company, follow the link.

$TWTR is trading at $36.49 at market close, down 3% for the year. That’s 35% below the 52-week high, and 9% from the

52-week low.

So what does unusual options activity in TWTR tell us?

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.

It’s also heavily utilized for social interaction among users.

However, the company’s business model leaves something to be desired. While

revenue growth has improved, user growth has slowed down.

The company still has a long way to go to consistently generate profits.

Monetization of TWTR’s users has been a real challenge so far.

Here’s the deal…

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.

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.

Long-term calls like this are generally called LEAP options. LEAPs tend to be

more investments than trades. It’s a cheaper method of getting long large

amounts of the stock without having to pay up for the stock itself.

Because the options don’t expire until 2017, the in-the-money calls (like these)

tend to act just like the stock would.

Here’s the chart of $TWTR:

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 today’s earnings release, which is very positive so far.

That LEAP call purchase looks to be very well-timed!

Ultimately though, an investor isn’t buying LEAP options for a short-term

move.

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,

it’s generally a bullish sign for the stock.

More Options Trading Ideas…

Keep in mind, there’s a lot more unusual options activity going on than what we

discuss here.

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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