MIXED PICTURE ON TWTR
Fundamentals are still poor
But the stock could be technically appealing
TECHNICALS FIRST
Up-channel in place since late May 2016
Short-term currently positive: Trading at the bottom of the channel
Traders could trade the channel: Long around 16.50, short around 20.50
HOWEVER
stock near historical low ($13.91) is insufficient to trigger fundamental purchase
Current, low trading volumes suggest current price action is not very meaningful
FUNDAMENTALS WILL MAKE THE DIFFERENCE IN THE END
What will really make the difference for the sock are the upcoming earnings (Feb 6)
As has been the case in the past, expect heavy volatility around announcement date
WHAT DO TO WITH THIS CONFUSION?
Active traders can trade the up channel (see above)
Current share owners should HOLD into earnings as long as we stay >$16
Non holders should prefer options strategies to buying, or selling, outright
CREDIT OPTIONS STRATEGY REMAINS OUR FAVORITE
Sell 17FEB17 $16 put = +$0.57/share (indicative)
Buy 17FEB17 $20 call = -$0.46/share (indicative)
Total = Earn +$0.11/share to wait for the earnings break on the upside/downside
Alternatively buy the $19 call and pay $0.10/share to potentially make more profits on the upside
Fundamentals are still poor
But the stock could be technically appealing
TECHNICALS FIRST
Up-channel in place since late May 2016
Short-term currently positive: Trading at the bottom of the channel
Traders could trade the channel: Long around 16.50, short around 20.50
HOWEVER
stock near historical low ($13.91) is insufficient to trigger fundamental purchase
Current, low trading volumes suggest current price action is not very meaningful
FUNDAMENTALS WILL MAKE THE DIFFERENCE IN THE END
What will really make the difference for the sock are the upcoming earnings (Feb 6)
As has been the case in the past, expect heavy volatility around announcement date
WHAT DO TO WITH THIS CONFUSION?
Active traders can trade the up channel (see above)
Current share owners should HOLD into earnings as long as we stay >$16
Non holders should prefer options strategies to buying, or selling, outright
CREDIT OPTIONS STRATEGY REMAINS OUR FAVORITE
Sell 17FEB17 $16 put = +$0.57/share (indicative)
Buy 17FEB17 $20 call = -$0.46/share (indicative)
Total = Earn +$0.11/share to wait for the earnings break on the upside/downside
Alternatively buy the $19 call and pay $0.10/share to potentially make more profits on the upside
Trade closed: target reached:
The earnings break never took place as TWTR continues to disappoint. If not assigned, take the premium pocketed and move on. If assigned on the puts, take your minimal losses and move, as the stock looks weak in a strong market.