MomentumOptionsTrading.com Midday Update for 7/30/2014
Twitter (TWTR) Zooms on Earnings Beat/ Update on US Steel (X)/ New Trade!!!
Twitter (TWTR, $46.79, up $8.20) sent the shorts sellers of its stock running for cover as shares are surging 21% today following an earnings beat-and-raise quarter.
The naysayers that say said shares were headed back to the lows $30′s or that the company’s business model needed “tweaking” are now having second thoughts.
The company reported a profit of 2cents a share on revenue of $312 million. The suit-and-ties were expecting a loss for a penny a share on revenue of $283 million. Obviously, Wall Street’s expectations were too low and pessimism was too high.
I have chronicled Twitter’s fall from grace following the 52-week high just south of $75 to the May low to under $30. I recommended the January 50 calls (TWTR150117C00050000, $4.70, up $2.85) back in early May at $1.75 and the trade made 28% by mid-June after closing the trade for an average price of $2.20. They are up over 150%. Unfortunately, I didn’t keep them on my Watch List as these options were back near the original price point. However, shares were at $32 and not $38 so the risk parameters were much higher going into earnings.
Twitter may be complicated to use to some, quirky for others, or a non-factor in most people lives. I have talked about their brand name and news feed (tweeting) being a global force and the earnings surprise was just what the bulls needed.
Elsewhere, shares of United States Steel (X, $32.80, up $5.13) are soaring nearly 20% after reporting a smaller-than-expected loss. I talked about Wall Street’s expectations coming into the quarter and the wide range analysts had but the bigger news is what the options are doing.
The US Steel September 30 calls (X140920C00030000, $3.40, up $2.80) are up a jaw-dropping 467%.
Heading into the second half of trading, the Dow is down double-nickels to 16,856 while the S&P 500 is lower by 3 points to 1,966. The Nasdaq is higher by 9 points to 4,451 while the Russell 2000 is up a point to 1,143.
I have another New Trade for today on a stock that is no stranger to the portfolio. I recommended call options in early February that returned readers over 200% in 3 weeks. I’m looking to pull another rabbit or two out of the hat as I’m also looking at a longer-term trade for the Weekly Wrap as well.
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