Options Alert: Twitter Traders Break Records as Elon Musk Fuels Historic Rally


Twitter leaped yesterday after Elon Musk revealed a giant stake in the social-media company. The news also triggered historic options volume.

More than 1.5 million calls and puts changed hands in TWTR on Monday, according to TradeStation data. That was 346,000 contracts more than the previous record in September 2016. The volume surge also made TWTR the third-busiest underlier in the entire market, up from its normal position around 85th place. It even surpassed Tesla (TSLA), the trillion-dollar disruptor that gave Musk the capital to make the investment.

Twitter (TWTR), daily chart, with 200-day moving average and daily options volume.

Musk is now the biggest shareholder in TWTR, with about 3 million more shares than mutual-fund giant Vanguard. His purchase quelled worries he would form a competing social media company. Widely followed tech analyst Dan Ives of Wedbush also said Musk could now look to buy even more of the company.

The move boosted other social-media companies including Meta Platforms (FB) and Snap (SNAP), which have lagged for months as investors unloaded high-multiple growth stocks.

TWTR ended the session up 27 percent to $49.97. Even with the rally, the company’s 30 percent decline in the last year still ranks in the bottom 20th of S&P 500 members.

Twitter Options

TWTR’s weekly 50 calls expiring this Friday, April 8, were the busiest option in the entire market yesterday. They traded more than 180,000 contracts, with premiums ranging from $0.99 to $3.32.

TradeStation Hot List showing most active underliers on April 4.

Calls fix the level where investors can purchase a stock, so they tend to appreciate when shares go up. Puts are just the opposite, controlling moves to the upside.

Call volume outnumbered puts by more than 2-to-1, according to TradeStation Data. The company’s five most active contracts were also calls.

TWTR has struggled to grow in recent quarters. It fell sharply in late October as U.S. traffic slowed. The last set of numbers on February 10 missed estimates slightly, but the stock bounced on a buyback announcement. Its next quarterly report is estimated for April 28.

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