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Most Active Options Update: Facebook Inc (NASDAQ:FB)

FB option traders eye near-term support

by 11/19/2013 2:49 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), Tesla Motors Inc (NASDAQ:TSLA), and Intel Corporation (NASDAQ:INTC).

Tesla Motors Inc put volume is running at a 52% mark-up to typical intraday levels today, after the stock was put on the short-sale restricted list. The shares dropped quickly right out of the gate amid reports of a formal investigation into recent car fires, but have since reversed course. Meanwhile, Intel Corporation is trading higher, following this morning's upbeat analyst note, and bullish option players are targeting the weekly 11/29 25-strike calls. Finally, here's a closer look at how Facebook Inc speculators are adding new positions in the December series.


Facebook Inc puts have been popular among short-term traders, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.73, which ranks in the put-skewed 61st percentile of its annual range. In fact, over the past 50 sessions, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have sold to open 1.08 puts for each one they've purchased. In the front-month series, the December 42 strike is a favorite among put writers, and since Aug. 27 (the session following August options expiration), 6,623 contracts have been sold to open here on the ISE/CBOE/PHLX.

This penchant for selling Facebook Inc's December 42 puts is being witnessed in today's session, where 14,476 contracts have crossed at this out-of-the-money strike -- mostly at the bid price. Volume outstrips open interest, and data from the ISE confirms that a number of positions have been sold to open. In other words, these speculators are banking on the $42 mark to hold as support over the next four-plus weeks. In this best-case scenario, the puts will expire worthless, and the traders will retain the initial credit collected as their full potential reward. If FB is trading below this strike at expiration, the put sellers would likely be assigned, and on the hook to purchase FB shares for $42 apiece, no matter where the stock is trading.

On the charts, Facebook Inc (NASDAQ:FB) has roughly doubled in value throughout the past 52 weeks. After hitting a record peak of $54.83 on Oct. 18, the stock entered a brief period of consolidation around the $46 mark. At last check, Facebook was seen trading at $45.73.


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