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Go Long Twilio Inc (TWLO) Stock Ahead of Earnings With Slimmed-Down Risk

Investing is risky, but this play can help you go long TWLO into earnings


Twilio Inc (NYSE:TWLO) went public less than a year ago, so it’s a relatively new kid on the block. Its company bio is filled with the hot buzzwords of current trends. Here is a sample: “Programmable cloud communications platform to embed voice, messaging, video and authentication capabilities.” So basically, they aim to globally connect devices across the cloud.

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Usually I am a fundamental investor but I do leave room for speculative bets and TWLO falls into that category purely because of its public age.

Although I do speculate, I am still a conservative investor, so I won’t be risking $34 per share at face value without any room for error.

That being the case, I will use options instead of buying Twilio stock outright.

Technically, TWLO has momentum, with higher lows knocking on pivot lines. If they break, bulls should overshoot higher. I see three potential areas of interests above starting with $35 per share followed by $37.50 then $40.

While this is not a forecast, these would be where interesting battles will form between bulls and bears.

TWLO Stock Trade Idea

The Bet: Sell the TWLO Oct $24 put and collect $1.25 per contract to open. I have an 80% theoretical certainty that this put will expire worthless in my favor, else I would be put the stock.

Usually I like to sell opposing risk to balance my trade but in this case, it would defeat the purpose of catching upside potential in a new entrant. So I could buy sacrifice puts to cover the crash scenario mainly for the upcoming earnings report.

The Juice (Optional): For even more profit potential, I would buy the TWLO May $34.50/$35.50 debit call spread for 30 cents per contract. I need the stock to rally past my strike before expiration, and the faster the better. But as long as it stays above my sold puts, any premiums I recover from selling my calls would be pure profits.

This trade setup would make me long TWLO stock for free through the earnings. Even if Twilio does not rally, I can still generated income with zero out-of-pocket expense. If TWLO falls below my sold put then I would have the chance to own the stock at a 28% discount from current level.

Email with questions or join me to learn more about options in a personal 1on1 webinar here. Nicolas Chahine is the managing director of As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @racernic and stocktwits at @racernic.

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