Options traders are betting more than Twitter Tiktok buyout rumors think


Twitter is drawing the attention of bullish options traders amid reports the social media company has had preliminary talks about a possible takeover of TikTok’s U.S. operations.President Donald Trump recently signed an executive order banning U.S. transactions with TikTok’s parent company ByteDance, which would essentially shut down TikTok in the United States if it were not sold to a U.S. company.

Microsoft confirmed last week that it also discussed the possibility of acquiring TikTok, which could potentially cause problems for Twitter in its pursuit of the popular social sharing app. However, Twitter options activity during Monday’s session painted a very optimistic picture about the possibility of making some sort of deal.

“We have seen the average daily call volume double, with nearly 160,000 calls exchanged. Most of them were short-term: the 38, 39, and 40-shot calls going out until the August expiration, ”said Michael Khouw, chief investment officer at Optimize Advisors. Monday on “Fast Money”.

The August expiration is just two weeks from this next Friday, which fits well with the amount of time Twitter would need to close a deal to buy out TikTok, which may indicate that these traders are betting on speculation for warm up as a ruler of September 15. the order deadline is approaching.

“The buyers of those 40 calls were paying around 75 cents,” Khouw said, “It would be a bet for the stock to go up by about 8.5%, but it’s understandable why they’re using options. [to make that bet]. Option prices are relatively cheap on Twitter. … This is one way for these investors to speculate on this, but without risking much. ”

Twitter shares were slightly higher in Tuesday’s session.



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