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Most Active Options Update: Facebook Inc (FB)

FB call volume soars, as the stock moves back above $50

by 12/10/2013 3:09 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. Three names of notable interest this afternoon are Facebook Inc (NASDAQ:FB), Yahoo! Inc. (NASDAQ:YHOO), and Micron Technology, Inc. (NASDAQ:MU).

Yahoo! Inc. moved to its highest mark since January 2006 today, after RBC raised its price target for the stock last night, and the Internet company released a detailed revenue composition. This technical tenacity prompted one trader to use YHOO's January 2014 puts and calls to initiate a hedge against a potential near-term consolidation. Elsewhere, Micron Technology, Inc. is in the green, following its settlement with Rambus Inc. (NASDAQ:RMBS). In MU's options pits, calls are outpacing puts by a margin of more than 2-to-1. Finally, here's a closer look at how Facebook Inc bulls are setting up their bets, after the stock took back the $50 mark.

Most

Facebook Inc is trading higher today, and has reclaimed its perch atop the round-number $50 mark -- an area that served as resistance through November. Not surprisingly, call volume has soared to two times the intraday average, as a number of speculators bet on additional upside.

Among short-term traders, the weekly 12/13 50.50-strike call has been a popular bet, where the majority of the 19,569 contracts traded have done so on the ask side. With FB last seen at $50.26, these calls are a stone's throw away from being in the money. Should the stock fail to topple the $50.50 mark by this Friday's close, the most the traders stand to lose is the initial premium paid.

Meanwhile, one longer-term Facebook Inc (NASDAQ:FB) speculator appeared to be adjusting her bullish outlook as a result of today's positive price action. Specifically, one massive block of 26,408 January 2014 45-strike calls changed hands in the first half of the session, below the bid price at $5.60 per contract, while a larger block of 40,000 January 2014 50-strike calls simultaneously switched hands above the ask price for $2.40 apiece. According to Trade-Alert, selling (to close) the lower-strike calls, which may have been originally initiated on Nov. 26 at a cost of $3.15 apiece, helped to cover the cost of buying (to open) the higher-strike calls. The new position reflects the expectation that FB will continue to move north of $50 through January options expiration.


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