Twitter (TWTR)

Jan 13, 2021Trade Ideas

If you’re a contrarian, this may be an interesting opportunity.

Over the last few days, Twitter dropped from $52 to about $48. All after it banned President Trump from tweeting. They noted his account posed a risk of incitement.

However, that move backfired on the stock.

“Twitter’s move against the outgoing president, whose account had more than 88 million followers, was the first permanent suspension for a head of state, and it’s likely to spark furious debate about the role tech companies play in regulating speech,” quoted by the New York Post.

Leaving our politics out of this – as all analysts should – we’re finding opportunity in the stock, technically. Looking at a one-year chart, the stock could refill its recent bearish gap, near-term. In addition, the stock has become oversold on RSI, MACD, and Williams’ %R. It’s also catching support right under its 50-day moving average, where it tends to bounce.

There are a few ways to trade TWTR.

One is to buy the TWTR stock at market on oversold conditions. Two, you can buy to open the TWTR Feb. 19, 2021 50 calls at market. You can hedge with the TWTR Feb. 19, 2021 48 put.

With the tension surrounding the stock, all we’d want to do is jump in on oversold conditions, wait for the bounce, and move on.

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