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Twitter is set to fly: Trader

Twitter is set to fly: Trader

Twitter shares have been grounded since plunging more than 26 percent on April 28, but according to one trader who relies heavily on the technicals and options market, the little blue birdie could be ready to fly again.

"Weak guidance really hurt this stock. It went from $52 to $36 [in one day] but now we're in a consolidation phase, and I think it could be set to rally between now and the end of the year," technical analyst Andrew Keene said Tuesday on CNBC's "Trading Nation."

Keene's chart work suggests that Twitter is sitting on solid support at $35, "this is where the stock saw a double bottom back in December and January," he said. In addition to that near-term support at $35, Keene said Twitter has long-term support at $30. "If we get back below that $30 level, however, it could really get ugly. But I don't see that happening."

Instead, Keene expects shares of Twitter to rally back above $50 by the end of the year, or 37 percent higher than current levels. So to make a bullish bet, Keene sold the January 30/20 put spread for $1.50 and then used the proceeds to purchase the January 48-strike calls for $1.50. "If the stock breaks under $30 I start losing money, I don't make money or lose money between $30 and $48, so if the stock just sits here, no harm no foul," said Keene, founder of Keene on the Market. Above $48 Keene begins to see profits.

"I expect to see a lot of upside in Twitter," said Keene.

To note, Keene had a similar call in GoPro two months ago, and since then the trade has been quite profitable.

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