Twitter (TWTR, $65.91, down $0.41) will report its first ever earnings numbers as a publicly traded company after the close today and all indications are shares will move $10+ in extended trading and on Thursday’s open.
The suit-and-ties are expecting the company to lose 2 cents a share, on average, but the range is 17 cents. The low estimate is for Twitter to lose 13 cents a share while the high estimate is calling for a profit of 4 cents a share.
We have been following the options on Twitter for a few weeks but the premiums are rich and that will likely keep us on the sidelines.
We profiled a possible straddle options trade coming into the week that could make a double-digit return but we still don’t like the cost to do the trade.
The February 65 calls (TWTR140222C00065000, $5.80, down $0.40) came into the week at $5.65
The February 65 puts (TWTR140222P00065000, $5.00, down $0.05) started Monday’s session at $6.30.
It would have cost nearly $12, or $1,200, to buy 1 contract of each the call and put option on Monday’s open and we said shares would need to be above $77 or below $52, technically, by late-February for the trade to breakeven.
The trade has gotten a little cheaper to put on but we still don’t like the risk/reward as a move of less than $10 will crush the premiums in these options.
As we head into the second half of trading, the Dow is declining 3 points to 15,442 while the S&P 500 is down 3 points to 1,752. The Nasdaq is lower by 16 points to 4,015 and the Russell 2000 is declining 10 points to 1,092. The S&P 500 Volatility Index ($VIX, 19.45, up 0.34)
We have a New Trade we are getting into so let’s get on it! Subscribers, check the Members Area for the updates.