Twitter Inc (NYSE:TWTR) shares are on the move. Buyers are swarming this morning sending the blue bird higher by over 6%. As always, the Twittersphere is rife with speculation about who might be putting in a phantom buyout bid now. Whatever the reason, though, the pop is breathing new life into TWTR stock at just right time.
That’s because Twitter was on the verge of giving back the lion’s share of its gains acquired during the late-April ramp.
As a self-professed chart watcher, I must say Twitter boasts one of the messiest charts on the Street. It’s been jumping around like a jackrabbit and altogether unable to settle into a sustainable trend. Just when a downtrend begins to take root, buyout speculation sends TWTR stock to the moon.
Then when a potential uptrend finally sprouts, the failure of said rumor — or another disappointment — delivers a swift kick to the keister, sending the stock right back down.
With that lengthy disclaimer out of the way, today’s surge has carried Twitter stock back into bullish territory. It now rests above the 20-day, 50-day, and 200-day moving averages.
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Time will tell if it sticks, but buyers have definitely established a foothold. The stock has room to run until its next resistance level near $18.75.
While we’re only one hour into the day, volume has already surpassed yesterday’s entire trading session, so we’re seeing a massive amount of participation here. By the closing bell, we should have quite the accumulation day.
Clearly, you’re too late for the initial pop here, but that doesn’t mean you can’t latch on for a second wind. Let’s check out a trade that’s best fit for speculatin’.
The TWTR Trade
If you’re looking for a low-cost, limited-risk avenue for betting on further upside, then long calls are worth a shot. Implied volatility remains subdued, so options can be scooped up on the cheap.
Buy the Aug $17 calls for $1.80 or better.
The initial cost represents the maximum risk and will be forfeited if TWTR stock rests below $17 at expiration. The max reward is unlimited, so pull out the pom-poms and root for the blue bird to score some monster follow-through.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.
