On CNBC’s “Options Action,” Tony Zhang of OptionsPlay suggested investors should consider a bullish options trade in Twitter Inc (NYSE:TWTR), going into earnings. The company is scheduled to report earnings on Thursday and the options market is implying a move of 11.2% in either direction. The stock has moved 13.2% on average, on the event, over the last 8 quarters.
To make a bullish bet, Zhang wants to sell a put spread in the name. He wants to sell the August $66 put and buy the August $60 put for a total credit of $2.45. If Twitter stays above $66 at the August expiration, Zhang is going to collect the premium. The trade starts to lose money below $63.55 and it can maximally lose $3.55.
