My general rule trading TWTR is don’t get long without puts. After learning the hard way on the 2015 trip from mid 30 to the low 14s in 2016 the only thing that kept it from being a disaster was rolling my put protection down. The near takeout in Oct/Nov gave me an exit which I took. Now here we sit around 17.09 with Jan IV in the 30 handle. Noone cares for the Dirty Bird anymore.
My better trades have been buying TWTR volatility in the 40’s with a 60 day duration or longer. There is almost always something to make it work. Right now you can buy Feb volatility with earnings for the mid-50s. Translated that is the near the money strangle for 2.15 with an earning cycle and 43 days to expiration.
Expiration trades where you buy the juice into the earnings gives you less decay for a normal position. It effectively drops the IV that you are paying for the options since the decay is just a fraction of normal. When the market forgets a stock like TWTR the earnings juice gets cheap. I think it should be owned.
I like owning the TWTR Feb 17/16 strangle for 2.15 or better. It is hard to believe the stock can’t move 1 or 2 bucks between now and Feb expiration.
Disclosure: Positions in TWTR