Twitter Stock Rally Brings In Fresh Wave of Options Bulls – Schaeffers Research (blog)

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Twitter Inc (NYSE:TWTR) is up 4% at $18.43, putting the shares on pace for their highest close since their late-July bear gap. Interestingly, this puts TWTR stock on pace to close atop its 24-month — or two-year — moving average for the first time ever. Meanwhile, options traders continue to bet on more upside from the security.

twitter stock

First of all, the equity has a 10-day call/put volume ratio of 4.88 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), meaning almost five calls have been bought to open for every put. This ratio ranks in the 70th annual percentile, signaling a stronger-than-usual preference for long calls over puts.

It’s more of the same in today’s trading, where roughly 80,000 calls have traded, versus fewer than 20,000 puts. In fact, call volume is running at three times the expected pace, and in the lead by far is the weekly 10/13 18.50-strike call. Buy-to-open activity appears likely, so these bulls would be betting on more gains from TWTR before tomorrow’s close, when the contracts expire.

Also popular today are the October 19, November 19, and December 17 calls. If traders are buying to open positions here too, they’re speculating on Twitter at a good time. That’s according to its Schaeffer’s Volatility Index (SVI) of 34%, ranking only 8 percentage points from a 12-month low.