A couple of months ago, I introduced you to our newest expert analyst Genia Turanova. We brought Genia in to take the helm of two of our most important and successful premium newsletters (The Daily Paycheck and Game-Changing Stocks). And she hasn’t disappointed. In fact, one of her most recent picks for Game-Changing Stocks is up 20% in a matter of 10 trading days — and she believes there could be even more upside ahead.

Before I tell you about that pick, I should also mention that another one of our strategists, options expert Jared Levy, has been following the very same stock for some time as well. And he’s recommending a safe way to play the upside the stock still has while also protecting against the downside. 

That stock in question is social media giant Twitter (NYSE: TWTR), which has surged on rumors of a potential takeover from a number of suitors. 

The Most Important Social Media Platform
It’s easy to see the appeal of Twitter for its buyout potential. 

#-ad_banner-#The first tweet was sent just over 10 years ago on March 21, 2006. Today, the social network has 313 million monthly active users (82% of which are on mobile devices). The microblogging platform supports more than 40 languages, and sends 1 billion monthly unique visits to websites with embedded tweets. 

Not only that, but Twitter has also become THE destination for a few things that make it incredibly valuable. 

Want to engage with your favorite celebrity athlete or entertainer? Chances are they have a Twitter account. You find the accounts of pop superstars like Katy Perry and Justin Timberlake, entertainers like Tonight Show host Jimmy Fallon, sports figures like Christiano Ronaldo and Lebron James (along with many, many others), and see what they’re up to within seconds. 

Is a story breaking about an important global event, like an uprising in Egypt or an airplane crash in Southeast Asia? Twitter will have the latest news from sources like CNN or the Wall Street Journal as it happens — and often before it breaks elsewhere. 

In fact, it’s hard to name a celebrity, politician, athlete, business or media outlet that doesn’t use Twitter.

As Genia puts it, “the appeal of Twitter lies in its network: the reach, the speed, and the ease of use. Further, Twitter allows users to tweet images, and its simplicity has made it one of the most popular mobile applications ever and one of the most important social networks.”

America’s Most Popular Game Comes To Twitter
But despite all this, Twitter has still failed to fully monetize this social media dominance into dollars and cents. Twitter did bring in about $2.5 billion in revenue in 2015, but the company is not profitable. A number of steps have been taken to increase revenue recently, including stepping up advertising, offering lucrative revenue sharing deals for content creators with a large following, and acquiring streaming rights for popular events, most notably Thursday night games in the National Football League.

This last move is an especially important recent development. Live sports and Twitter go hand-in-hand. By offering America’s most popular sport live on its platform, Twitter encourages more interaction. Users can scout Twitter to get the latest news that might impact their fantasy football lineup before the game starts, then watch the live feed of the game and comment in real time as the game goes on, interact with fellow fans, follow their favorite sports media outlet’s commentary, and even trash talk with an opposing team’s star player after the game.

This may sound trivial to the uninitiated, but trust me, it’s a big deal. Advertisers saw the potential, too, reportedly buying packages for commercials and “promoted” tweets ranging from $1 million to $8 million. Initial reports indicated that about 243,000 users were watching the first Thursday night game for an extended period of time, and that the numbers have continued to climb as the season has progressed. And all Twitter had to do was pay $10 million for the streaming rights of a 10 game package this season.

My theory is that this development is one of the most important elements of the re-sparked interest in Twitter as a buyout candidate. 

Why So Many Companies Want Twitter
On that note, here’s what my colleague Jared Levy had to say about the potential fit for Twitter:

“Twitter could be a good fit for a number of prospective buyers and is said to be in talks with several companies, including Alphabet’s (NASDAQ: GOOGL) Google. Twitter could add to Google’s massive data aggregation, increasing its dominance in the ‘big data’ realm. Google could sell ads across Twitter. 

The Walt Disney Company (NYSE: DIS) is another potential suitor. Disney could use Twitter as a foray into social media, allowing it to market its movies and TV shows in new ways and integrate Twitter feeds into brands like ESPN for a more immersive viewer experience. 

Then there’s Salesforce.com (NYSE: CRM), which missed out on the LinkedIn deal and is reportedly hungry for a social media company. Salesforce could tap into the millions of professionals on Twitter to gather business intelligence data and expand its products and services. 

Of course, this is all speculation and nothing has been formally announced yet, but my research and instincts tell me a deal of some sort isn’t far off.”

Should a deal be announced, Jared anticipates a quick and painless acquisition. He thinks a Twitter deal is unlikely to face the regulatory hurdles that some other high-profile mergers and acquisitions have in the past.
 
And even though the recent Microsoft/LinkedIn deal may look better on paper, Twitter has a bigger reach and influence in terms of users and potential. As Jared puts it, Twitter is a gauge and stage for modern society. And he’s absolutely right: Twitter has triple the monthly active users (313 million) that LinkedIn does (106 million), and it’s used to track everything from political races to sports sentiment and even to combat terrorism. 

That’s a powerful reach that could make Twitter very attractive to a potential buyer. 

Now, you may be asking yourself: If Twitter has all of this potential as a money-maker, then why hasn’t it taken more steps to be profitable sooner?

It’s simple, really. Jared’s theory is that Twitter’s goal from the very beginning was to gain enough reach to go public to make its founders and shareholders rich from an acquisition. I think he’s right. In fact, you only have to look at its co-founder and current CEO Jack Dorsey, who in conjunction with his role at Twitter, also serves as founder and CEO of Square, a mobile payments company. And as a wise person once said, man cannot serve two masters. (It’s worth mentioning that Dorsey also sits on the board of Disney.)

“It’s for this reason that [Twitter] needs a content provider like Disney or data aggregator like Google to make its 140-character sounding boards worth anything. But there is value to be unlocked by the right buyer… and opportunity for traders who get in front of such a deal,” Jared says. 

Now, you could certainly buy shares of Twitter and bet that a deal gets done. That’s your prerogative. But Jared and his Pro Trader readers have a different idea in mind. It involves a simple options strategy that could allow them to potentially pocket 31% as long as shares of Twitter are above $21 by the time the trade expires in January. If you’re curious about the details of this trade, I encourage you to learn more about Jared’s service by visiting this link.