Trade of the Day: Twitter Inc (NYSE:TWTR)

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I think that Twitter Inc (TWTR) is the future. It has a lot of potential; it just hasn’t made it work yet, and someone has to figure out how to monetize it. The NFL deal to live-stream 10 football games on Twitter tells me TWTR is getting more creative in what it’s doing, and that’s good.

The company is a great acquisition at only $10 billion when you think about the number of users. Just look at what Facebook Inc (FB) did with their business; users become so entangled into the service when they’re connected to all of their family and friends that way. It’s kind of built like a franchise. And I think Twitter has the same potential.

Let’s see if we can profit from this bullish thesis with a call debit spread:

Using a spread order, buy to open the TWTR June 17th $15 call and sell to open the TWTR June 17th $17 call for a net debit of about $0.40.

There are several June expirations available for TWTR options. Be sure you are opening the monthly options that expire on Friday, June 17, 2016.

This is a longer shot trade, so take a small position. One of these days, somebody’s going to buy Twitter — but I just don’t know when…so I’m going to try and catch it with this debit spread.

A debit spread is simply a way to lower the cost of buying options, as the option that you sell to open (short) helps offset the cost of the option that you buy to open. Therefore, this call debit spread is a way to lower the cost of buying bullish call options. Many brokers will require the use of margin and/or a set amount of reserved capital to execute a debit spread; contact your broker directly for specific requirements.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/05/trade-day-twitter-inc-nyse-twtr/.

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