Tag Archives for " twilio "
3 Reasons I Would Not Short Twilio (TWLO)
Internet infrastructure play Twilio (TWLO) is one of the hottest stocks in the market, having nearly tripled off the June lows. This morning, it hit fresh a high of $64.16 before pulling back to $60.71. A lot of folks are now talking about betting against Twilio, but I would not consider shorting it for 3 simple reasons: 1) Put Skew There is a significant put skew in TWO options, meaning traders are paying up a lot more money for puts than they are for calls. For example, October $60 put is going for $11.20 while the call is just $7.50. This is a sign that options traders are desperate to bet against the stock, a sign of massive embedded negativity. 2) Ramping Put Volume Put options volume has exploded. Today, 6,300 TWLO puts have traded. Yesterday, 27, 308 traded. The day before, 5,578 traded. In the 29 days prior, it traded an average of just 1,306 puts a day. This is another sign that traders are desperate to bet against the stock. 3) High Short Interest Short interest is 24% of the float as of 7/29, and judging by the options action, it’s probably even higher today. Conclusion The current setup in Twilio is eerily reminiscent of GoPro (GPRO) and Ambarella (AMBA) in late 2014. In both cases, we were looking at fad stocks with huge momentum that were also very crowded shorts. The bears arguing that “what goes up must come down” got steamrolled. If the market falls, odds are Twilio (TWLO) drops too. But make no mistake — if you short this stock, you are playing with fire, because it is indeed a very crowded short. P.S. Have you signed up for Dave Green’s FREE trading webinar yet?
Continue Reading -->The VIX Has Bottomed… and 4 Other Thoughts on Today’s market
Want to Start Earning Bigger, More Consistent Profits? Dave Green can show you how! 1) Return of Volatility? Volatility may finally be returning. As you can see in this chart, the VIX hit a bottom last week at 11.02. It’s now above 12 and I think it moves much, much higher from here. (full disclosure: I am long VIX calls) We just went through 26 straight days without a 1% move in the SPX. Volatility is mean-reverting. You never know exactly when the pendulum swings back, but I believe we are eyeing the seeds of it. For example… 2) Russell Down? The Russell 2000 is underperforming today, which is a reversal of the recent trend. This could be a sign that traders are growing a little wary and taking some profits off the table. Right now, the Russell is at the lows of the day. If it makes even lower lows, the bulls will get more nervous. 3) Biotech! The bios are underperforming a little bit today, but like the Russell, traders will get nervous if we see a real breakdown here. For the past couple of years, biotech has been ground zero for speculative money, and when it breaks higher, the bulls tend to feel pretty good. And of course, the flipside is equally true. Bulls get nervous when the bios give up. IBB needs to hold $290ish. 4) Apple & Berkshire Apple’s (AAPL) mega rally off $91.50 was ignited by Berkshire Hathaway’s buy of the stock. Today, it’s getting a little pop on news that Berkshire increased its stake. It would be funny if Warren Buffett marked the bottom and the top. 5) Tomorrow Is a BIG Day Tomorrow we’ve got crude oil inventories and the FOMC Minute, both of which could set off some fireworks. Traders are once again completely confused over the Fed’s direction, and maybe we get some clues as to whether a September rate hike is on the table as some folks have intimated. And with the marketing teetering back and forth, maybe traders get worried if oil breaks down. 6) Twilio! (BONUS ROUND!) Twilio (TWLO) is the current poster child for momentum trader wackiness. It’s still going strong even though some others like ACIA and FN are falling off. If TWLO follows suit, it could be another sign of profit-takers cashing in. By the way, a lot of traders are talking about TWLO as if it’s a sure-thing short, but I would not touch it on the short side. P.S. Have you signed up for Dave Green’s FREE trading webinar yet?
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