Twitter (NYSE: TWTR) has been preceded by a sell hashtag so far in 2014, with shares falling nearly 44% so far this year. The stock has traded a 52-week range of $29.51-$74.73, having reached its all-time high on December 26 of last year.
At least one institution would seem to believe there is room to the upside. Last week in the Thursday and Friday session, we saw massive call buying in the TWTR Sep 50 Strike line, with over 70,000 contracts being bought between $0.80 and $0.90. With the potential to control 7 million shares of TWTR, this is massive speculation the stock will be trading above $50 on the third Friday in September.
With $5.6 million of risk capital invested in this position, this is one of the biggest orders we have seen so far this year. Twitter stock trades an average daily volume of 23 million shares, so this order has the potential to control nearly one third of the float.
Current open interest in the Sep 50 line is over 90,000 contracts, as we continued to see smaller blocks come across the Trade-Alert scanner Friday afternoon going into the close. The Sep 50 Calls were $1.15-$1.25 at the close of Monday’s session, meaning the call buyer has seen paper profits of around $0.35, or $2.45 million dollars.
Traders take note: an order of this size (relative to average daily volume) will push stock higher as the market makers selling these calls must hedge their position with long stock.
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