Looking for a TWTR Bounce

Hey There Shoppers,

Usually in this space I chat about a stock that I’m trading, along with a story or some experience I’ve had regarding that stock.

But do I dare attempt to @ Twitter (TWTR)?

The last thing I want to do is go political.  

I would like to say one thing, though …

Can’t we just have a news outlet that reports the facts, please??!!!

Let’s stick to trading, shall we?

I’m looking at the TWTR stock chart and see several things that point to a bounce.

Click Here to Learn How to Play It …

See You Next Tuesday!

Licia Leslie

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Headline: Looking for a TWTR Bounce

Here’s a fun fact: My Mom got a Twitter account before I did.

#CoolMom

She was so excited …

But I’m not sure if she’s ever tweeted anything. So, yeah.

Anyway, someone who has tweeted plenty is Donald Trump, who later today will be former President Donald Trump.

On Jan. 8, when Twitter permanently banned him from their platform, the high in TWTR was $52.07.

Since then, TWTR has traded down to a low of $44.40 yesterday.

I think it is time for a bounce in TWTR and I will tell you why …

First, the yellow line shows support at this level.

Second, you can see the candle that formed yesterday …


It’s called a hammer.

Here’s a closer look:

A hammer occurs at the bottom of a down trend and can indicate a trend reversal.

It is “hammering out” a bottom.

The hammer forms when the body (the difference between the opening and closing prices) is at the upper end of the day’s trading range.

The shadow will be at least two times the length of the body.

The upper shadow will be very small or not there at all.


Our Strategy

So what option strategy do we want to use to take advantage of TWTR trading higher?

As you already know, I always look at the implied volatility of the options vs the historical volatility of the stock.

If the implied vol of the options is lower than the stock’s historical volatility, cheap options can be found for purchase.

If the options’ implied volatility is higher than the stock’s historical vol, I prefer to sell the options.

Yesterday, TWTR’s implied vol was 62.82 while the historical vol was only 31.17.

HUGE difference!

One reason for this is that TWTR’s earnings announcement is Feb. 9.

Those options are pumped up pre-earnings because the market makers (liquidity providers) do not want to be short options when the stock can make a wild move on the earnings news.

To take advantage of this, I like selling a put vertical in the Feb. 12 expiration cycle.

That is only three days after the news, so we can take advantage of selling this high volatility.

Just be sure to be out of this spread BEFORE the earnings announcement.

I like selling the Feb12 44/30 put spread collecting $2.36.

The implied vol of the 44 puts is 72.85 and the IV of the 30 puts is 95.84.

But remember, on a small dollar option that we are buying for protection and margin reduction, the IV doesn’t matter.

I will keep a tight rein on this spread. I would take my loss if the spread trades $3.30.

Wrapping Up

It will be interesting to see if any changes are made regarding these powerful platforms.

Elsewhere, my SLV trade is still right where I bought it and at that low price I still like it.

Thanks for reading…See You Next Tuesday!

Licia Leslie

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