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Most Active Options Update: Facebook Inc (FB)

Facebook Inc speculators readjust their bullish and bearish positions

by 3/17/2014 2:39 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).

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Facebook Inc is seeing accelerated activity on both the call and the put side today, with overall options volume running at a 30% mark-up to the intraday average. A significant portion of the action is at the hands of two speculators who appear to be rolling their bullish and bearish positions, respectively.

On the call side, two large blocks totaling 46,195 changed hands at the June 65 strike earlier near the bid price, suggesting they were sold. Meanwhile, a block of 56,024 May 70 calls simultaneously hit the tape and easily exceeded open interest, implying it was opened. According to Trade-Alert, the further-dated, lower-strike calls closed out a position that was originally initiated on Feb. 12 (when the speculator rolled his February calls up and out), with the proceeds used to fund the purchase of the bigger block of nearer-term, higher-strike calls. In other words, this speculator now thinks that FB will regain its foothold atop the $70 mark by the close on Friday, May 16. The equity was seen above this level as recently as last Thursday.

Separately, a lot of 18,967 weekly 3/28 67.50-strike puts traded this morning below the bid price, again implying they were sold. At around the same time, a larger lot of weekly 3/28 65-strike puts crossed as well, and Trade-Alert suggests the higher-strike puts were closing out of a long position that was initiated last Wednesday, while the lower-strike puts were being opened. Simply stated, this trader believes that FB will struggle in the near term, and breach the $65 mark by the close on Friday, March 28. Of note, the stock has not traded south of the lower strike on an intraday basis since Feb. 13.

In fact, although trading lower earlier today on the back of a bearish brokerage note, Facebook Inc (NASDAQ:FB) was last seen 1.1% higher at $68.43. This upward momentum only highlights FB's withstanding technical tenacity, with the shares up more than 158% year-over-year.


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