Digital ad spending dropped in April, and that pushed down the price of ads on Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR). While that was undoubtedly bad, FB started losing its biggest advertisers over a boycott.

As I mentioned last week, civil rights groups, including the NAACP and the Anti-Defamation League, called on companies to boycott FB. The boycott gave investors a great entry point for selling put writes on FB, and even though more than 400 brands stopped advertising on FB’s platform, the company started to recover.

TWTR has also suffered from some loss of advertisers, but its struggles have been much less discussed because its CEO isn’t in the middle of a civil rights boycott.

With another contentious presidential election approaching, users will take to these platforms to share their thoughts, and as long as TWTR doesn’t lose as many advertisers as FB, it is the perfect target for a bullish put write.

New Features Promised

TWTR and FB both lost the Unilever Group (NYSE:UL) as an advertiser. The company cited the “polarized atmosphere in the U.S.” as the main reason for the move. The Coca-Cola Company (NYSE:KO) also paused all social media advertising.

Because of the timing, it’s reasonable to assume the boycott has something to do with these decisions, but while FB is making headlines for refusing to change its policies, TWTR is teasing new features.

Thanks in part to ongoing protests around the country, the company is also more relevant than ever.

TWTR will definitely take a hit to earnings for the year because of the loss of advertisers, but I think investors will see this as a buying opportunity.

Already on the Road to Recovery

After hitting resistance at around $37, the stock started a gradual decline, taking it below both its 50-day and 200-day moving averages. The stock’s decline accelerated after the news that advertisers were pulling their ads from TWTR’s platform.

Since then, TWTR has bounced off support at $28. The stock had been interacting with the $26-$28 range as support while it was climbing in April and early May.

Daily Chart of  Twitter, Inc. (TWTR) — Chart Source: TradingView

The stock broke above its 50-day moving average yesterday, and if it can continue to push higher, it would be a bullish sign. However, even if it can’t break higher in the near term, I don’t expect it to drop below support at $28.

Just to be safe, I am recommending traders sell a put write with a strike price slightly below support.

Sell to open the TWTR July 31st $26 put at about $0.32.

Note: Be sure you are opening the weekly TWTR options that expire on Friday, July 31, 2020.

This is a high-risk trade, so take a small position.

About Naked Put Writes

A naked put write is a bullish position in which you expect the price of the underlying stock to increase.

InvestorPlace advisor Ken Trester also brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.