TWTR is having a bad year. Since reporting their first results as a public company back on February 6th, the stock is down 22% and quickly approaching the earnings gap low of $50:
Why is this level so important you may ask? Well, on its IPO day back in November the stock traded as high as $50, after being priced at $26, only to quickly retreat from that levels. There were sellers at $50 on its opening day. After the stock made back a good bit of ground from its lows just below $40, the stock went parabolic into year end blasting thought he prior high at, $50 on its way to $70. When the stock gapped down 24% following disappointing results, the stock found buyers at what price??? $50. Prior resistance had become new support.
So what now? The stock has basically been drifting lower as the broad market and many of its peers have ripped back to their prior highs. With the stock’s intra-day movement a bit of a grind, options on the stock have become as cheap as they have been since November, approaching the prior lows:
Cheap is fairly relative, options still trade at about a 45 vol and like alot of these names the vol actually increases on breakouts as those moves can be pretty wild. We would possibly take a shot in the name from the long side/long premium side if it took a dip below 50 and intra-day reversed but we’ll wait and see for now if it can hold……wait for it…..$50.