Twitter, Inc. (TWTR) is a global platform for public self-expression and conversation in real time offering products and services for users, advertising, developers, platform and data partners for users to create content. The stock is currently trading around $36.01 at the lower end of its 52 week range of $33.51-$55.99. The stock has been under performing the market this year falling 4.57% year to date. TWTR is scheduled to report earnings after the closing bell today, and the stock is up $1.31 or 3.78% on the session ahead of the close.
Over the past 6 quarters TWTR has rallied on earnings day 2 times with an average move of 17.83%. The stock appears bearish on a chart going into the release having traded below or in the Ichimoku Cloud since May on the daily bars. Over the past 6 quarters TWTR has rallied on earnings day to expiration 2 times with an average move of 16.65%. Investors are mainly interested in the company’s subscriber growth, recent acquisitions, and if the company will turn a profit. With a very bearish chart, poor earnings history and no profit to show it is hard to justify anything but a short position on TWTR.
The options market is currently implying a move of around $4.56 or 13.2% in TWTR by this Friday’s close giving us targets of $31.45 and $40.57.
Trade: Buy this week’s 33-32 Vertical put spread for $0.25
Risk: $25 per lot
Reward: $75 per lot
Break Even: $32.25