The holiday cheer isn't spreading to Twitter shareholders.
The social media giant fell 3 percent Monday to its second-lowest intraday level ever as continued concerns over the company's slowing user growth has investors hitting the sell button. For those looking to profit from the stock's decline, one trader outlined a very festive options strategy.
On CNBC's "Options Action" Friday, Michael Khouw explained a rather unusual trade structure called a put Christmas tree. In this strategy, a trader will buy a put, sell a lower strike put and then sell another low strike put all of the same expiration. Options traders typically assess the payout structure by using a graph comparing the stock price to profit or loss. On such a chart this particular trade looks like a Christmas tree.
The trade Khouw suggested for Twitter was the March 22/20/18 put Christmas tree for zero cost. In this trade, Khouw is willing to get long the stock if it falls as low as $18, but he sees profits if the stock is anywhere from $16 to $22 by March expiration. That's nearly 30 percent lower than its current price of around $22.50.