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Most Active Options Update: Facebook Inc (FB) and Procter & Gamble

FB and PG are seeing notable options trading activity today

by 1/18/2013 1:53 PM
Stocks quoted in this article:

Of the 20 equities with the heaviest options volume in recent sessions, two names of notable interest this afternoon are Facebook Inc (NASDAQ:FB - 29.51) and The Procter & Gamble Company (NYSE:PG - 69.96). Here is a quick look at today's interesting activity in these options pits.

A calendar spread traded on FB today, as speculators used weekly options to target short-term (and slightly longer-term) gains in the social-media company's shares. According to data from Trade-Alert, around 10:30 a.m. Eastern, a block of 26,050 contracts was sold to open at the 2/1 34-strike call below the bid price, at $0.46 per contract. At the same time, a symmetrical block of contracts was bought to open at the 2/8 34-strike call, above the ask price of $0.60 per contract. The trader hopes, therefore, that FB will have its upside capped at $34 through Feb. 1 expiration and will then rally beyond $34 by the following Friday, when the long calls expire. Making this trade even more aggressive in nature is the fact that FB earnings are due before the short call expires, on Jan. 30.

One week before the company's earnings report, put buyers are descending on PG; the consumer stock has seen roughly 17,000 puts change hands today, more than doubling the typical intraday put volume. Two strikes seeing notable attention are the February 65 put and the April 65 put, which have respectively seen about 5,000 and 4,000 contracts cross the tape. Although open interest exceeds volume at both of these strikes, at least some of the volume is being bought to open, per data from the International Securities Exchange (ISE). Additionally, almost all trades at these out-of-the-money strikes have been executed at the ask price, and implied volatility has ticked higher, pointing to buyer-driven activity. Both options look for declines in PG stock, but the April contract has additional time built in for this downward move to transpire. Based on the respective volume-weighted average prices (VWAP) of $0.24 and $0.59, the February option has a breakeven price of $64.76 (strike less VWAP), while the April option has a breakeven of $64.41.

The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.

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