A social-media stalwart got hammered yesterday, and someone positioned for a major rebound.
Twitter (TWTR) fell almost 9 percent about halfway through the morning. As it clawed its way back to cut those losses, a trader amassed about 80,000 January 2020 70 calls for $0.55. Excluding ETFs, it was the busiest options contract all session.
Calls fix the price where a security can be purchased. (See our Knowledge Center.) As we saw on Wednesday, cheap out-of-the money contracts can generate huge leverage on a percentage basis when a rally occurs.
But yesterday’s options were really something because they expire more than a year into the future. Their strike price is also more than double TWTR’s current value, which suggests the investor is looking for a long-term rebound.
News on the company has mostly been positive, with indications it’s taken market share from rival Facebook (FB). However yesterday it was apparently hurt by worries about a potential boycott by political conservatives.
Overall options volume in TWTR was quadruple the average in the last month, with calls accounting for a bullish 78 percent of the total.