Gap Down Fade in TWTR

[Steven Place]

After a downgrade and a double digit % selloff, TWTR is seeing a followthrough gap down. This tends to be fadeable in momentum names– where we see ugly selling then a gap.

Here is the trade I like:

Sell TWTR Feb 50/45 Bull Put Spread for 1.75 or higher.

This trade makes money as long as TWTR stays above 50 going into feb opex. This has enough time where we won’t be caught on the “gamma knife edge.”

If we break under 50, we will adjust by rolling the spread out to the 45/40 spread.

[Steven Place]

TWTR is seeing a nice pop on FB earnings, and we’ve realized about 60% of the credit with a few weeks to go– and we’ve got earnings up on deck.

I want to close out here and stalk for new trades in the stock.

[Author]

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