Twitter attraction

February 6, 2015 11:38 AM

Twitter options

Out-of-the-money call options expiring today on shares of Twitter (Ticker: TWTR) have attracted the biggest pocket of volume as the stock’s fortune traverses the strike price throughout the morning. Shares in the social media giant have surged by 15.8% to $47.75 on Friday after the company reported stellar earnings after Thursday’s close. In earlier trading the stock touched $48.48 and its highest price in almost four months. That means that the 48.0 strike price has attracted plenty of trading, especially for options maturing at the end of the session.

Of the approximate total volume across all expiries at the 48.0 strike of 35,000 contracts, option traders have bought and sold 18,000 calls expiring at the end of the session at premiums ranging from 10-90-cents. By 11:15am ET, the options were priced at 32-cents and would lose all value by the end of the day with the stock currently below the strike price. Activity in those options was even bigger than the second most active contract, where volume of 14,400 calls was seen in the March expiration at the higher 50.0 strike. Implied options volatility on Twitter that had surged to around 69% ahead of earnings, slumped to stand at 42% after the event.

Chart –shows heady pace for Twitter options volume after earnings

About the Author

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.