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Option Brief: Calls were the options of choice on Facebook Inc (NASDAQ:FB) yesterday, which isn't too surprising considering the stock hit its highest mark on record thanks to some upbeat analyst attention. By the close, around 239,000 calls had crossed the tape, compared to 129,000 puts. Short-term traders eyed the stock's weekly 3/14 72- and 74-strike calls, but differed on their views of a continued rise into uncharted territory by week's end.
For instance, more than half of the 12,514 contracts traded at the weekly 3/14 72-strike call changed hands at the ask price. Implied volatility (IV) was up 1.8 percentage points on the day, and open interest rose overnight, pointing to buy-to-open activity. The volume-weighted average price (VWAP) for the calls was $0.82, making breakeven (at expiration) $72.82 (strike plus VWAP) -- an area Facebook has yet to explore.
Meanwhile, the weekly 3/14 74-strike call saw 7,014 contracts cross the tape; however, this volume was split between the bid and the ask side. IV jumped 3.4 percentage points, and open interest tacked on more than 2,800 contracts overnight, making it safe to assume that new positions were initiated. Simply stated, those selling to open the out-of-the-money calls expect FB to stay south of the strike through Friday's close, while those buying to open the options bet on a move north of $74 by week's end.
In today's session, the stock is seeing pressure from a broad-market bearish bias. In early trading, Facebook Inc (NASDAQ:FB) is modestly lower to trade at $69.87.