Twitter’s Ups and Downs Make Hedging Costly for Investors
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Twitter Inc.’s first earnings report and a 119 percent surge in the shares has made the cost of protecting against volatility higher than all but one of the companies in the Russell 1000 Index.
Implied volatility, the proxy for future share movement used to price equity derivatives, was 93.03 on Jan. 10, triple the average for stocks in the Russell 1000. Only Ariad Pharmaceuticals Inc. was higher, according to data compiled by Bloomberg on 30-day contracts closest to the shares.