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Most Active Options Update: Facebook Inc (FB)

Facebook Inc option traders gamble on a short-term layer of support

by 4/10/2014 12:02 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).

Most

Put players have been active in Facebook Inc's options pits of late, per data from three major exchanges. Specifically, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.56 ranks in the 98th percentile of its annual range. In other words, puts have been bought to open, relative to calls, with more rapidity just 2% of the time within the past year.

The accelerated put volume is being witnessed in today's session, where puts are trading at a rate nearly two times the intraday average. However, not all of the day's activity is of the traditional bearish variety. The most active position thus far is the weekly 4/11 60-strike put, where 13,529 contracts have changed hands -- mostly on the bid side, pointing to seller-driven volume. Meanwhile, implied volatility has jumped 12.2 percentage points, and volume is outstripping open interest, two indications that new positions are being initiated.

By selling the puts to open, traders are expecting FB to stay north of the $60 mark through tomorrow's close. In this ideal scenario, the puts will expire worthless, and the speculators can pocket the initial premium collected as their full potential reward. According to Trade-Alert, the volume-weighted average price for the puts is $0.35 apiece.

Today's eleventh-hour speculators are not the only ones who've been eyeing FB's $60 level, which may benefit the aforementioned put sellers. Specifically, a heavy accumulation of put open interest currently resides at the weekly 4/11 60 strike, and this could translate into a layer of options-related support as the hedges related to these contracts unwind ahead of tomorrow's close.

In today's session, although FB is failing to capitalize on this morning's bullish brokerage notes -- down 2.5% to $60.86 -- the equity has so far maintained its perch atop $60. Meanwhile, Facebook Inc (NASDAQ:FB) announced earlier that it is discontinuing its mobile-app messaging feature, as the company looks to shift attention to another one of its mobile messaging apps.


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