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Monday, April 4th 2022

Musky Options in Twitter Prior To SEC Filing Stake

Twitter call options have risen sharply since Elon Musk started tweeting about interest in the stock back in March 25th.


Elon Musk's tweets about Twitter's support for free speech on March 25th caused a surge in call options for Twitter, with open interest in May $44 strike options rising and implied volatility increasing. This trend continued until Musk's announcement of a "passive" 9% investment in Twitter shares. Insider trades also occurred, with V (Gp) L.L.C. Slta buying stock at $43.94 on December 6th, 2021. Twitter shares rose 27% to $50.10 by April 4th, 2022, with implied volatility in the April 14th monthly expiration at 88% and the put call slope steepening severely to -3.2%.

Options in Twitter started trading as Elon Musk tweeted a poll asking his followers if Twitter is supporting free-speech or not on March 25th. Later that day, a large amount of calls traded in Twitter betting on a rally in the stock.

Below, is our new Analysis tab in the ORATS Dashboard. The circled cyan horizontal bar shows the open interest in the May $44 strike options that mostly traded on March 25th. Implied volatility graphed below that started to rise that day (purple arrow up) into the big announcement today that Musk is making a 'passive' 9% investment in Twitter shares. 

Also, graphed is insider trades. The large circle shows that stock was bought at $43.94 on 2021-12-06 by V (Gp) L.L.C. Slta, a group related to Silver Lake Group, L.L.C. and ZUO stock.

Twitter shares are trading $50.10 up 27% near the close today 4/4/2022.

Implied volatility in the April 14th monthly expiration is at 88% up 115% today. The put call slope has steepened severely to -3.2% indicating that every 10 deltas the IV will be 3.2% higher. 

It is usual for Twitter and most stocks to be positively sloped where the puts have a higher IV than the calls. This was the case for Twitter on 3/24/22 before Musk started tweeting. Twitter's slope was positive 1.5% and now will all the calls being bought the slope is negative 1.2%.


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