Have you seen Twitter Inc (NYSE:TWTR) lately? TWTR stock is up more than 57% since its August bottom, and the shares have recently topped resistance at $25. The recent run has attracted quite a bullish following.

Even Wall Street analysts are getting in on the rally. Yesterday, Twitter attracted a pair of upgrades. Both JPMorgan and Summit Redstone upgraded TWTR stock to a “buy” on Monday. The pair cited growth potential for ad revenue and active daily users, claiming that Twitter has finally figured out how to monetize its user base.

This is something to keep in mind heading into Twitter’s next earnings report, which should arrive in the last week of January. For now, TWTR stock is facing a technical development that could send the shares lower over the short-term.

Click to EnlargeIn short, the TWTR stock price is overbought.

The recent analyst-driven surge has pushed Twitter stock’s 14-day RSI reading to north of 70. Looking at a chart, you can see that every time this reading has topped 70, Twitter stock it was hit with a sharp correction. In fact, it happened twice last month.

There is a caveat to this bearish outlook for TWTR’s stock price. Sentiment is bearish. This in and of itself isn’t a bullish driver, but the recent shift in sentiment among analysts could help drive buying activity for TWTR stock well into overbought territory.

For instance, Thomson/First Call reports that 32 of the 36 analysts following the shares rate them a “hold” or worse. The 12-month price target also rests at $19.26, a discount to Twitter stock’s current perch.

Should more analysts follow JPMorgan and Summit Redstone and upgrade TWTR stock, it could add more buying pressure despite the stock trading in overbought territory.

On the options front, speculative traders are already on the bullish bandwagon. Currently, the January 2018 put/call open interest ratio for TWTR comes in at 0.56, with calls nearly doubling puts among back-month options.

Some of this activity may be related to TWTR short interest, which jumped 9% in the most recent reporting period. However, nervousness from short sellers could also be considered a potential bullish driver for TWTR stock.

As for implieds, January 2018 options are pricing in a potential move of more than 9% heading into expiration. That places Twitter stock’s upper bound at $27, while the lower bound rests at $23.

Two Trades for TWTR Stock

Put Spread: In the absence of more analysts jumping on the bullish bandwagon, the path of least resistance lies to the downside over the next couple of weeks. TWTR stock’s technical picture says it all. When they are overbought, TWTR shares hit a correction.

To take advantage of this, traders might want to consider a January 2018 $23.50/$24 bear put spread. At last check, this spread was offered at 15 cents, or $15-per-pair of contracts. Breakeven lies at $23.85, while a maximum profit of 85 cents, or $85-per-pair of contracts — a potential return of more than 130% — is possible if TWTR stock closes at or below $23.50 when January 2018 options expire.

Call Spread: While I can’t see more analysts upgrading TWTR stock before the company reports earnings next month, it’s not out of the realm of possibility. As such, traders looking to play the bullish angle on Twitter stock might want to consider a January 2018 $26/$26.50 bull call spread.

At last check, this spread was offered at 12 cents, or $12-per-pair of contracts. Breakeven lies at $26.12, while a maximum profit of 38 cents, or $38-per-pair of contracts — a potential return of 216% — is possible if TWTR stock closes at or above $26.50 when January 2018 options expire.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.