I play poker and trade options, seeking edges from study, reflection and analytics.

#005 TWTR Calls Closed Profit

Trade Details: Sold to close 7 Sep 30th Twitter Inc (NYSE:TWTR) 18 calls for $4.40 (in at $0.85 for 1 day), $3,071.19 total proceeds. The trade executed at 10:17:46 when the stock was approximately $22.40.

Return: 408.7% after commissions

Note: Wow. What a reversal of fortune! I entered this trade yesterday with what looked like a great technical and event setup, looking to hold into early next week. After the close, the stock was taken down by 4% on an analyst downgrade and several other negative articles. Opening at that price would have taken my options down by about half. This morning, David Faber reported on CNBC that a number of technology companies have expressed formal interest in buying the company - the shares moved from $17.95 to $22.00 almost immediately. 

Trade was very strong early in the session; the buyout report feels more legitimate than others that have swirled around Twitter in the past. To evaluate the trade, I watched TWTR's bid/ask + volume, option pricing and the daily candle as to stay out of the minute by minute volatility. After a half hour or so, I started watching the 5 minute chart. With the MACD pinching, volume lining up on the ask at $22.99 and the first sign of weakness in the form of a hanging man candle, I pulled the exit trigger. Also, Faber had just been on to readdress the story, making the point that there was no imminent deal... I contemplated selling 4 out of 7 options, looking for more upside, but I decided not to be a pig and take the spectacular profit in context of my long-term goals.

 Optionshouse 5-min chart showing the trade's entry and exit.

Optionshouse 5-min chart showing the trade's entry and exit.

Status: Account $3,825.98 | Q1 Return 665.2% | Q1 Goal 60%

#006 YNDX Call Spread

#005 TWTR Calls