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Options Trading Series (TWTR - 1/18/19 $35 Calls)
تم تحديثه
TWTR faced its worst single-day decline in the past four years, falling +30% post-Q2-18 earnings.
On the surface, the report was solid; revenue grew 24% Y/Y (beating analyst expectations by 13.65M) and EPS of $0.17 beat by $0.01.
Despite the beat, the company was cautious over user growth in the third quarter due to cutting down on fake and spam users (MAU dropped by 1M Q/Q). Analyst had expected a 1M users gain.
The result of the MAU miss was TWTR falling from ~$42 down to ~$31.
A day after the decline many analysts stepped out in TWTR's defense saying that the sell-off was an overreaction to something that is overall very positive -- cleaning up the platform.
From my research, the average analyst price target is ~$42 (now representing ~30% upside from current levels).
Technically speaking, looking at RSI you can see that TWTR is right in oversold territory at 25 -- a level last reached back in 1/2016.
However, looking back further TWTR's RSI has hovered around a low of 20. So shares could actually go lower before resuming any upside. The lowest I think shares will go is $29-$30 - which is right at the 200-day moving average.
So from a risk/reward perspective, we are looking at potentially +30% on the upside vs. ~10% on the downside. That's an excellent risk/rewards for me.
Overall, owing TWTR as we move into mid-term elections in Nov seems like a no-brainer to me (not to mention Twitter is Trumps #1 platform to vent). TWTR is a powerful tool today. This company is worth owning long-term and is set up nicely for a short-term option trade.
Bottom line: I am now long the 1/18/19 $35 Calls.
I'll post updates periodically.
Thanks for reading, would love to hear your thoughts/ideas!
Cheers!
On the surface, the report was solid; revenue grew 24% Y/Y (beating analyst expectations by 13.65M) and EPS of $0.17 beat by $0.01.
Despite the beat, the company was cautious over user growth in the third quarter due to cutting down on fake and spam users (MAU dropped by 1M Q/Q). Analyst had expected a 1M users gain.
The result of the MAU miss was TWTR falling from ~$42 down to ~$31.
A day after the decline many analysts stepped out in TWTR's defense saying that the sell-off was an overreaction to something that is overall very positive -- cleaning up the platform.
From my research, the average analyst price target is ~$42 (now representing ~30% upside from current levels).
Technically speaking, looking at RSI you can see that TWTR is right in oversold territory at 25 -- a level last reached back in 1/2016.
However, looking back further TWTR's RSI has hovered around a low of 20. So shares could actually go lower before resuming any upside. The lowest I think shares will go is $29-$30 - which is right at the 200-day moving average.
So from a risk/reward perspective, we are looking at potentially +30% on the upside vs. ~10% on the downside. That's an excellent risk/rewards for me.
Overall, owing TWTR as we move into mid-term elections in Nov seems like a no-brainer to me (not to mention Twitter is Trumps #1 platform to vent). TWTR is a powerful tool today. This company is worth owning long-term and is set up nicely for a short-term option trade.
Bottom line: I am now long the 1/18/19 $35 Calls.
I'll post updates periodically.
Thanks for reading, would love to hear your thoughts/ideas!
Cheers!
ملاحظة
Nice morning for TWTR, with shares ~4% higher after Citron came out at raised their price target to $54. "Twitter is more relevant now than it has ever been and in media, dollars follow relevancy," Citron analysts wrote. "While Twitter is commonly bucketed with Facebook FB and Snap SNAP, Citron believes Twitter actually sits alone, with no direct competitor in the exchange of thoughts."
marketwatch.com/story/twitter-stock-gains-after-citron-goes-long-sets-52-price-target-2018-08-13?siteid=yhoof2&yptr=yahoo
It's actually not too late to jump into this trade.
Cheers!
ملاحظة
Adding to my TWTR position this morning. Sell-off is becoming overdone. I see $28 as the floor to hold. If it falls that low, I will be aggressively adding. The risk/reward would be strongly in your favor. I'm also buying the 9/28/18 $31.50 Puts to hedge.
If you haven't jumped into this trade, now is the time to open this position -- the market is giving you a gift.
More updates to come.
Cheers!
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