Twitter is drawing the eye of bullish options traders amid reports that the social media company has had preliminary talks about a possible takeover of TikTok’s US operations.
President Donald Trump recently signed an executive order banning U.S. transactions with TikTok’s parent company, ByteDance, which would essentially close TikTok in the U.S. if it were not sold to a U.S. company.
Last week, Microsoft confirmed that it has also held talks about the possibility of acquiring TikTok, which could potentially present problems for Twitter in its quest for the popular social sharing app. However, the activity of Twitter options in Monday’s session painted a very optimistic picture that could get some sort of deal.
“We saw double the average daily call volume, almost 160,000 calls traded. Most of those were short-dated: the 38, 39 and 40 strike calls that expire after August,” said Michael Khouw, Chief Investment Officer at Optimize Advisors , Monday on “Fast Money.”
August delay is just two weeks from this coming Friday, and falls well within the time frame on which Twitter should complete a TikTok takeover action, which could be a signal that these traders are betting on speculation to warm up as the September 15 executive order deadline approached.
“Buyers of those 40 calls pay about 75 cents,” Khouw said. [to make that bet]. Option prices are relatively cheap in Twitter. … This is a way for those investors to speculate, but not risk a great deal. “
Twitter shares were slightly higher during Tuesday’s session.
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