Elon Musk is, once again, offering to acquire Twitter Inc TWTR.
While the announcement sent shares of the social media platform soaring, some investors may have profited early from the news.
What Happened: On Tuesday, Musk confirmed his intentions to acquire Twitter at the originally agreed-upon price of $54.20. The proposal was confirmed by Twitter, which saw its shares halted with news pending.
Investors like Carl Icahn who bet on Twitter in the $30s could have made a profit of $250 million on the news from Twitter and Musk. Options traders could have also profited big.
Options activity in stocks can sometimes signal big moves of the common shares, something that is tracked by Unusual Whales on Twitter with options data and a tagline of “follow the flow.”
On Sept. 29, Twitter had 11,000 in new volume for $45 call options with an expiration date of Oct. 14. On that date, shares traded between $42.39 and $43.11, below the $45 strike price for the entire day.
Shares of Twitter spiked to over $50 after the halt on shares ended.
Unusual Whales reported that new volume came in on these same options with interest of around 14,000. The options price was up around 3,000% after the Twitter news was announced.
“Someone always knows,” Unusual Whales tweeted. “I do not do callouts, but my systems picked it + the bullish moves up.”
On Tuesday, Twitter had heavy options activity due to the news with the $55 call options expiring on Jan. 20, 2023 seeing interest of 158,404, according to Unusual Whales.
See Also: Walking Away From Twitter Deal May Not Be An Option For Musk
Why It’s Important: The large options activity last week could signal that someone knew Musk was submitting a new proposal to Twitter. It could also be possible that someone placed a large bet that Musk would renegotiate a lower deal price prior to the Oct. 17 date that the trial of Twitter vs. Elon Musk is set to begin.
Tweets from Musk can often move stocks and cryptocurrencies, as noted recently by Benzinga.
Options activity in stocks related to Musk has also been a bit unusual this year.
Musk made headlines earlier this year for joking that he was buying English Premier League team Manchester United MANU, which is publicly traded.
Prior to his tweet about Manchester United, options activity in the public soccer team was larger than normal.
Two days prior to the tweet, a trader placed a call sweep on 30,000 options with a strike price of $14 and an expiration date of Sept. 16, 2022. The trade was a six-figure bet that the price of Manchester United would go up soon.
Unusual Whales highlighted that options activity in Manchester United was up 3,500% on the date in question. The options bet was highly profitable for the trader and will go down as being unusual.
TWTR Price Action: Twitter shares were down 1% to $51.32 on Wednesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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