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Options Radar: Facebook Inc, LinkedIn, and Global X Social Media ETF

Reviewing notable options activity on Facebook Inc, LinkedIn Corp, and the Global X Social Media ETF

by 7/15/2014 12:02 PM
Stocks quoted in this article:

Social networking stocks are feeling the heat today, after a report accompanying Fed Chair Janet Yellen to Capitol Hill called the sector's valuation "substantially stretched." Against this backdrop, Facebook Inc (NASDAQ:FB), professional networking peer LinkedIn Corp (NYSE:LNKD), and exchange-traded fund (ETF) Global X Social Media ETF (NASDAQ:SOCL) have attracted attention in the options pits. Here's a look at how today's option traders have been placing their bets on these three names.

  • Facebook Inc (NASDAQ:FB) is down 1.7% at $66.77, and options traders are placing bets on the equity's short-term trajectory. The security's 30-day at-the-money implied volatility has edged 1.6% higher to 46.6%, and eight of the 10 most popular options expire at Friday's close. The July 68 call is most active, though most of the action appears seller-driven. By writing the calls to open, the speculators are expecting FB to remain south of $68 through the end of the week. More "vanilla" bears, meanwhile, are buying to open the weekly 8/1 65.50-strike put, likely amid expectations for a post-earnings retreat for the shares. Facebook is slated to unveil its second-quarter figures after the close on Wednesday, July 23.

  • LinkedIn Corp (NYSE:LNKD) is 1.3% lower at $157.63, bringing its year-to-date deficit to 27.3%. The most popular LNKD option so far is the July 155 put, which speculators are buying to open. The puts will expire in the money if LNKD lands south of $155 at Friday's close, and the traders will forfeit the initial premium paid, should the equity maintain its perch atop the strike. On the charts, LNKD has struggled beneath its 10-week and 20-week moving averages since October, and has underperformed the broader S&P 500 Index (SPX) by 14 percentage points during the past three months. Off the charts, the company just purchased Newsle for an undisclosed sum, and will report earnings on Thursday, July 31.

  • Finally, the Global X Social Media ETF (NASDAQ:SOCL) is down 1.6% at $18.84, and the ETF's puts are flying off the shelves at six times the normal intraday rate. Almost all of the action has transpired at the July 19 put, with traders buying to open the contracts to gamble on a steeper slide for SOCL through the end of the week. Technically speaking, the ETF's 10-day and 20-day moving averages are on the verge of a bearish cross, and are currently lingering just north of $19. This formerly supportive duo of trendlines has rejected SOCL's recent advances, and could keep the shares lower in the near term.

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