Stocks quoted in this article:
The shares of Facebook Inc (NASDAQ:FB) touched a record high of $51.60 in early action, but have since fallen in sympathy with the broader equities market, down 0.1% at $51.18. Still, options traders are rolling the dice on an extended uptrend for FB, which has rallied more than 91% in 2013.
So far today, FB has seen roughly 277,000 calls cross the tape -- a 34% mark-up to its average intraday call volume, and more than twice the number of puts exchanged. Most active is the October 52.50 call, where more than 17,500 contracts have changed hands at a volume-weighted average price (VWAP) of $1.56. The majority of the calls crossed on the ask side, implied volatility is 3.7 percentage points higher, and volume has exceeded open interest at the strike, hinting at newly bought bullish bets.
To make money on their call purchases, the buyers need FB to muscle north of $54.06 (strike price plus VWAP) by options expiration on Friday, Oct. 18. From the stock's current perch, it would take a rally of 5.6% in order to hit breakeven. Risk is capped at the initial premium paid for the calls, should FB remain beneath the strike over the next few weeks.
Reflecting escalating demand for FB's short-term options, the stock's 30-day, at-the-money implied volatility has been advancing over the last 10 sessions, up 2.0 percentage points today at 67.3%. However, the security's Schaeffer's Volatility Scorecard (SVS) of 94 indicates that Facebook Inc (NASDAQ:FB) has tended to make outsized moves over the past year, relative to what its option prices have projected.
Option Briefs offer a concise look at recent notable trading activity. For more in-depth coverage of securities from an Expectational Analysis®
perspective, please visit our Trading Floor Blog section.