TWTR IV is not worth bird feed, WELL MAYBE

The Tweeting President, TWEET this and TWEET that.  There are few products used and mentioned more than TWTR on a daily basis and have a stock price that does so little.  I can’t think of any stocks really. Trading options comes in two schools in my opinion:

You stock is a vehicle to trade the options

The options are a vehicle to trade the stock

In the case of TWTR the fact that it is a fast growth company has long since passed.  Management mishaps and FB eating its lunch have left TWTR shares in the low teens.  Yet the ubiquity of TWTR continues to be a headline.  The stock sits in a lull then has a flurry of excitement.  For me it is a cheap long term long gamma shot when I am normally short vol in some form or another somewhere else.  I have a subscriber who buy writes TWTR with great success mostly since at this level it is hard for the stock to go too far down which makes an easy wheel trade with lower risk.  In our cases, it is not necessarily the TWTR story that is the draw, but the option characteristics we see with the name

LivevolX for Lightspeed

I like TWTR 90 day+ IV in the low 40’s and I buy a good chunk of it and manage the gamma.  TWTR might do something great but at this cheap IV it just has to do something.  If you don’t know how to manage a trade, take our Gold Class and learn to do it right.

The Trade

I like owning TWTR Jan 2018 near the money strangles.

Disclosure:  TWTR, FB positions

Andrew@optionvol

Mark@optionpit

 

Blog Image: 
Tags: