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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 today is Facebook Inc (NASDAQ:FB), as traders roll the dice on an Alibaba-related halo effect.
All eyes will be on the tech sector this Friday, when China-based e-commerce concern Alibaba Group Holding Ltd. (BABA) will begin trading its shares on the Big Board. It appears a number of Facebook Inc option bulls may be hoping a successful BABA IPO will have a halo effect on its fellow Internet issues, and are targeting front-month calls in today's session to gamble on a quick pop by week's end.
Taking a quick step back, roughly 50,000 FB calls have changed hands today, compared to around 32,000 puts. The most active option is the September 77.50 call, where a healthy portion of the 8,513 contracts traded have done so at the ask price, hinting at buyer-driven activity. Meanwhile, implied volatility is up 3.4 percentage points, signaling the initiation of new positions.
The out-of-the-money calls are being purchased for a volume -weighted average price (VWAP) of $0.27, making breakeven at this Friday's close -- when front-month options expire -- $77.77 (strike plus VWAP). Gains will accumulate north of here, while losses are capped at the initial premium paid, should FB close out the week south of the strike price.
This bullish positioning isn't surprising, considering Facebook Inc (NASDAQ:FB) has rallied 40% year-to-date. In fact, the shares tagged the $78.36 mark last Thursday -- their highest perch on record. This week, although the stock succumbed to weakness in momentum names early on, FB found a foothold atop its 50-day moving average, and was last seen 0.3% higher at $76.31.