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Most Active Options Update: Facebook Inc (FB)

Facebook Inc traders split on today's finish, while one trader braced for a steeper drop

by 5/2/2014 1:53 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).


Amid an attempt to push higher this week, Facebook Inc ran headlong into its 20-week moving average -- currently located at $61.11 -- which has not allowed a weekly close north of it since late March. Amid this trendline's recent emergence as a layer of resistance, a number of eleventh-hour speculators today are split on whether FB will finish north or south of here when the closing bell rings later this afternoon.

Diving deeper, one of the more active positions in FB's options pits today is the weekly 5/2 61-strike call, where 15,148 contracts have changed hands. These calls are going off at the bid and the ask price, and volume outstrips open interest, hinting at new initiations on both the short and the long side, respectively. Data from the International Securities Exchange (ISE) confirms that at least some of the volume has been at the hands of speculators selling and buying to open the weekly calls.

By writing the calls, the expectation is for FB to finish the session south of $61 -- the equity is currently 1% lower at $60.55. In this ideal scenario, the calls will expire worthless, and the speculators will retain the initial premium received as their full potential reward. Conversely, by purchasing the calls, the goal is for FB to rally past the $61 mark by the close. More specifically, the volume-weighted average price (VWAP) for the calls is $0.34, making breakeven at 4 p.m. ET $61.34 (strike plus VWAP).

Meanwhile, on the put side, one speculator is bracing for a steeper plunge for Facebook Inc (NASDAQ:FB), which is down nearly 17% from its March 11 record high of $72.59. Earlier today, a block of 3,000 December 40 puts changed hands at the ask price of $1.20, for a total cash outlay of $360,000 (number of contracts * premium paid * 100 shares per contract). With fewer than 400 contracts in residence here, it seems safe to assume that the positions are being bought to open. Based on this put's deep out-of-the-money status, this could also be indicative of a shareholder protecting paper profits against any additional losses for the social media maven.


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