Twitter shares have been quite the disappointment for investors over the past year, down nearly 40 percent. But according to one trader, the stock has found a floor heading into Thursday's earnings report after the bell.
On Wednesday, when bullish activity outnumbered bearish activity 2 to 1, and the social media giant's shares were at $40.30, one trader sold 2,500 January 2017 38-strike puts for $8.00 a share. The wager, which is worth $2 million in premium, is a bet that Twitter's shares will stay above $30 by January 2017 expiration. The stock hit an all-time low of $29.51 per share in May 2014.
"When you think about this, if [Twitter's] stock is at $38 [per share] or lower by January 2017 expiration, that trader is obligated to buy 250,000 shares at $38, but here's the deal—they really would be buying them at $30 [per share]," said RiskReversal.com's Dan Nathan on Wednesday's episode of "Fast Money."