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Most Active Options Update: Facebook Inc (FB)

Facebook Inc traders see a post-earnings surge into record-high territory

by 1/29/2014 2:02 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Facebook Inc (NASDAQ:FB).


Facebook Inc is headed into the earnings confessional after tonight's close, and one group of option traders today is betting on a big move higher in the aftermath. Specifically, FB's weekly 1/31 60-strike call has seen 17,229 contracts change hands roughly 11,250 more than the next most active contract. The vast majority of these calls have crossed on the ask side, implied volatility has shot 41.6 percentage points higher, and data from the International Securities Exchange (ISE) confirms that a portion of the activity is of the buy-to-open kind.

However, it's been a popular bet that this will be the week Facebook powers through the round-number $60 mark -- and into unexplored territory. In fact, just about 21,000 calls reside at this out-of-the-money strike, and for those that initiated long positions, they need FB to rise roughly 11% from its current perch at $54.07 by this Friday's close. Risk for all call buyers, though, is limited to the initial cash outlay.

Looking at Facebook Inc's (NASDAQ:FB) historical post-earnings price action reveals that a move of this magnitude is certainly not out of the question. In two of its past six quarterly showings, the stock has seen pops of 19.1% and 29.6% in the subsequent session, but has averaged a single-day gain of 7.4%. For FB's fourth quarter, consensus estimates are for a profit of 27 cents per share -- a dime over its year-ago results.


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