Earnings Beat TWTR Trade

Market Context
Good day Insiders,

The social media company Twitter is set to report earnings tomorrow before the open. To be completely honest I am of the opinion the stock is not going to move all that much. Implied volatility is at a prime 167% giving us an expected move of +/-$4, at the time of this update the stock is trading at $34. Our potential targets are $30 on the downside and $38 on the upside. We are going to use only 2 pieces in this trade. The buying of a call spread and the buying of an unbalanced butterfly. We are going to utilize the inflated volatility levels and two full trading days ahead.

The Trade
Buying the call spread as piece 1 and buying the unbalanced butterfly as piece 2.

Risk & Reward
The 2 pieces combined will use $5,700 in margin. Our breakevens in both the downside and upside are 27.50 and 38 respectively. In the event there is no movement, we have $900 at risk but we will find a way to get that back before Friday’s expiration.