Inspired by the need of our POTUS to counter punch any perceived attack, I took a look at TWTR. They dared to add fact checking to a Tweet, and now the Executive Branch must find a way to punish them.
I don't normally trade on fundamentals but I see enough technical reasons to short TWTR to enter a trade. It would have been better to wait until a close under the upward Trend Line but we did get a close below the 8ema. But should have also waited for the next candle to demonstrate continuation to the downside. There's also possible support from the 20sma and then again at the 50sma.
The technical short signals I see are:
- Near top of Downward channel.
- Minor Upward Trend Line about to break.
- ADX/DMI about to cross.
- High Stochastics dropping.
- Rejected off 200sma.
- Close below 8ema on good volume.
- Was a Doji Sandwich candle pattern before profit taking at the close.
Got Sep 30 Put for $3.15 with
Delta 40% and Gamma .042
Set the Target to channel bottom 20.
(30-20)=10*.042=.42=42% additional Delta.
40%+42%=82% Delta at $20 target.
(40+82)/2=61% Delta average (don't know how valid a linear relationship is).
10*61%=6.1+3.15=$9.25 estimated option value at target.
Risk is option cost 3.15
Reward is 6.10
R:R=3.15/6.10=1:2 very good.
Next Earnings Report is 7/30/20 Before Market Open.
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