If you’re biased toward, not just tweeting about Twitter Inc (NYSE:TWTR), but owning TWTR stock as well, don’t be. That sounds harsh, but I’m not saying don’t go long — I simply see the options market as a much better way to put your money where your mouth is. Let me explain.
Off the Twitter chart, former Microsoft CEO Steve Ballmer agrees. As a major shareholder of TWTR stock, Ballmer told CNBC’s Squawk Box that the social media company is a very good asset that’s been executing and monetizing well.
The upbeat, if not biased dialogue, noted Twitter needs to continue with its foot on the gas pedal. If the company is able to do that, “their path could be way up.”
As noted, I’m a believer in Twitter as well, albeit biased in a different way. At the moment I don’t have any vested interest in TWTR stock. However, our unbiased technical opinion is today’s pitch before the cameras isn’t in jeopardy of turning into yet another hook, line and sinker situation for today’s TWTR bulls.
TWTR Stock Daily Price Chart
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And with the Nasdaq up less than 0.2% for the same period, TWTR stock has also demonstrated nice relative strength gains too. All told, conditions are looking up for Twitter, but the technical narrative gets even better.
After a couple painful years of being in a bear market and at times feeling like Twitter might become irrelevant off and on the price chart, shares have emerged from a significant double-bottom pattern and are now putting together the building blocks for a newly-emerging uptrend.
The next confirmation in this bullish process will be for TWTR stock to make a new relative high above May’s false breakout pivot of $19.79. It would also be technically constructive for that price action to be a handful or more percentage points above the prior high in order to have a clear higher-high pivot in place.
If I was to take my predictive powers and project out even further in time, any corrective weakness in TWTR stock should ultimately be met with sufficient buying interest to form a higher low above the mid-June pivot test. And ideally, a technical hold and successful test of May’s pivot high would be a more classic outcome and confirmation for a new uptrend in TWTR stock.
TWTR Stock Bullish Modified Fence
Given our view TWTR stock is in the process of building a meaningful uptrend and after reviewing Twitter’s options, similar to last time, a modified bullish fence is considered an attractive alternative to positioning with shares.
A limited-risk design modification to the classic fence also makes sense as earnings in TWTR are about two weeks out. As much and with shares at $19.54, selling the Aug $18/$17 put spread and buying the Aug $21/$22 call vertical is priced for a debit of 5 cents and viewed as an attractive alternative to owning TWTR stock right now.
What’s the package do for would-be and bullish-minded TWTR traders? Well, in fear of pissing off my editors with too lengthy an article (Ed’s note: Too late!) — but in also recognizing that the mechanics and details of the strategy require and deserve more than just a tweet — I’ll suggest clicking here to review and following me on Twitter as well.
Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.