Earnings Beat – TWTR Trade
Good day Insiders,
Twitter is reporting earnings tomorrow pre-market and to be honest, I am not expecting much movement in the stock. At the time of this update the stock is trading at 34 and change and given the volatility levels are sitting just below 110% (107) let us look to take advantage of the lack of both the implied volatility. Twitter has an expected move of +/-$3.50 which places it down to 31 and upwards of 37. We will build our trade accordingly.
There will be 3 pieces in the trade. The buying of a put butterfly, the buying of a call spread and the selling of a put spread.
Risk & Reward
Our total risk in the trade will be $4,600 and our breakevens on the downside and upside are 32.50 and 36.50 respectively. In the event there is no movement is TWTR, we will be risking $525. Keep in mind that even after earnings come out tomorrow morning we have 4 full trading days for the stock to move. For those position sizing, adjusting the short puts will have the biggest impact on the margin used.