Twitter Inc (NYSE:TWTR) has been amazing so far in 2018. TWTR is up about 34% so far, putting the broader market S&P 500 Index and  the tech-heavy Nasdaq to shame. Twitter has ridden sale speculation and an impressive quarterly earnings report to get to this level. However, it may be time to fade Twitter’s good fortune, at least for the short term.

When I last checked in on Twitter in early February, my primary recommendation was a Feb $25/$26 bull call spread. I argued that earnings and the potential for a Twitter buyout made the shares extremely appealing over the short-term. Twitter went on to post blowout earnings, prompting a 20% single-day spike in the shares on Feb. 8.

If you got into the Feb $25/$26 bull call spread, congratulations! Depending on your entry price, you could have seen returns of more than 200% in just two days.

Click to Enlarge Unfortunately for Twitter stock, the shares are now in a short-term neutral-to-bearish position. After soaring to to their highest levels since July 2015, TWTR shares are now retreating. It is a somewhat orderly retreat, and it is one that is needed if Twitter stock is to move forward.

The shares are searching for price support right now, with selling emerging after the stock’s relative-strength index (RSI) hit overbought levels last week. But near-term support at $32 doesn’t appear likely to hold — especially in the absence of any new news.

The next potential floor for TWTR lies at $30, and unless additional positive news arrives, even this level could fall.

Twitter’s 50-day moving average is now moving into the $26 region, which should be a longer-term buy target for anyone looking to buy into TWTR stock.

As always, there is a caveat to this bearish outlook. Specifically, sentiment is extremely bearish and any acquisition news or follow-up on the company’s potential search for suitors could spark a sharp unwinding of this negativity.

Twitter stock options traders aren’t quite sure what to make of TWTR’s short-term prospects, either. Currently, the March put/call open interest ratio comes in at 0.77 — a middling reading that indicates complacency.

As for implieds, March options are pricing in a potential move of 7.75% heading into expiration. That places TWTR stock’s upper bound at $34.50, while the lower bound rests at $29.50.

2 Trades for Twitter Stock

Put Spread:  In the absence of any new developments for Twitter stock, the shares will be left to drift lower over the next couple of weeks. When TWTR is overbought, the shares will fall. To take advantage of this, traders might want to consider a March $30/$31 bear put spread.

At last check, this spread was offered at 30 cents, or $30 per pair of contracts.  Breakeven lies at $30.70, while a maximum profit of 70 cents, or $70 per pair of contracts — a potential return of more than 130% — is possible if Twitter stock closes at or below $30 when March options expire.

Call Spread:  On the other hand, it is certainly possible that someone will emerge from the woodwork to place a bid for Twitter and buy the company out. Any news on this front would be a considerable bullish driver. That said, the chances right now are rather slim.

Traders looking to go out on a limb and bet bullish on Twitter stock might want to consider a Jan 2018 $33/$34 bull call spread. At last check, this spread was offered at 66 cents, or $66 per pair of contracts.  Breakeven lies at $33.34, while a maximum profit of 66 cents, or $66 per pair of contracts — a potential return of 94% — is possible if TWTR stock closes at or above $34 when March options expire.

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