Following Tesla Inc (NASDAQ:TSLA) CEO Elon Musk's bid to buy Twitter Inc (NASDAQ:TWTR), the social media company adopted a limited duration shareholder rights plan, often referred to as a "poison pill."
What To Know: The rights plan aims to reduce Musk's likelihood of gaining control of Twitter through open market accumulation without paying all shareholders an appropriate premium or without providing the company sufficient time to make a decision.
Related Link: Twitter Takes The Poison Pill: Here's What It Means For Elon Musk And Shareholders
Virtus Investment Partners' Joe Terranova doesn't think the poison pill will prevent Musk from acquiring Twitter.
"If Elon Musk wants to buy Twitter, he will," Terranova said Monday on CNBC's "Fast Money Halftime Report."
The Tesla CEO can always raise his offer price, he said: "How is Twitter going to be able to turn down a price that let's say is above $54.20? What if he comes in and offers $60? So I like Pete's [Najarian] strategy because it's focusing on the completion of the transaction."
How To Trade It: Market Rebellion co-founder Pete Najarian told CNBC that he bought Twitter call options expiring in October on Monday. He noticed a huge volume spike in the $55 strike contracts last week, he said.
"We saw a big buyer. They bought 10,000 of the October $55 calls in one print for $3.70," he said. "So somebody out there feels like this will get resolved one way or the other."
Instead of following into the same trade, Najarian bought the October $50 strike calls and sold the $55 strike calls against it.
"It gives me a little bit more room to the downside and ... I'm OK capping what my upside would be on that because I think that the opportunity is there," he said.
Najarian noted that, at the very least, Musk is "stirring up the pot," which could lead to other bids for a Twitter takeover.
TWTR Price Action: Twitter has traded between $31.30 and $73.34 over a 52-week period.
According to data from Benzinga Pro, the stock was up 5.01% at $47.34 Monday afternoon.
Photo: www_slon_pics from Pixabay.
