Chatter over a potential Twitter takeover has the stock heating up this week.
Shares of the embattled social giant have rallied more than 5 percent in the past five trading sessions; the stock spiked as much as 8 percent on Tuesday shortly after a fake report suggested the company received a buyout offer. Deal or no deal, options traders are betting the rally could continue in the short-term.
On Tuesday, when options volume ran 2.5 times its daily average and calls outnumbered puts 3 to 1, one trader bet more than $500,000 that Twitter shares could rally another 8 percent in the next month. Specifically, that trader purchased 3,000 of the August 38-strike calls for $1.78 each. Since buying a call allows one the right to purchase a stock at a set price at a given time, this trade is profitable if the stock rises above $39.78 by August expiration.
"This trade really caught my eye because it prior to the fake announcement," options expert and CNBC Contributor Dan Nathan said Tuesday on CNBC's "Fast Money." According to Nathan, the trade crossed the wires at approximately 10 a.m.