The action in Twitter (TWTR) stock has been disappointing this year, to say the least. It’s a fact that’s all the more frustrating for TWTR fans given how tech stocks across the board have been booming. Owners of Amazon (AMZN), Alphabet (GOOGL, GOOG), and Facebook (FB) have been swimming in profits while TWTR shareholders have been living in squalor.
Twitter lovers in search of a silver lining should being eyeing its chart with interest right now. The technical structure of its trend has improved over the past month, and buyers have materialized in earnest following its latest earnings announcement. Let’s dig a little deeper.
The TWTR stock rally that kicked off October sent the blue bird flying back above the 50-day moving average. Its ability to remain aloft has allowed the 50-day moving average to flatten out and even begin rising for the first time in many many months.
What’s more, buyers have been ferocious in their defense of the $28 level, which corresponds with the pivotal 50-day moving average.
The earnings-induced down-gap in TWTR stock spurred aggressive buying, thus creating an impressive one-day gap fill. Though ground was given back later in the week, Friday’s retest of support, and subsequent rebound, reaffirmed buying aggression once more.
Here’s the bottom line: The TWTR stock price has turned a corner. If it can remain above $28, the bulls hold the upper hand.
TWTR Short Puts
Despite the post-earnings volatility crush, TWTR options remain rich. That fact, coupled with the cheap price tag, makes TWTR stock a prime candidate for short puts.
Sell the Dec $27 put for 90 cents. The max reward is limited to the initial 90 cents and will be pocketed if TWTR stock price can remain above $27 for the next 45 days.
By selling the put, you obligate yourself to buy 100 shares of TWTR if the stock falls below $27 by expiration. Those wishing to sidestep assignment could simply buy back the put to close the position if it’s sitting in-the-money near expiration.
At the time of this writing Tyler Craig did not hold a position in any of the aforementioned securities.
