Schaeffer's Options Center
Sponsored by:
Schaeffer's Daily Option Blog

Facebook Inc (NASDAQ:FB) Traders See a Short-Term Breakout

FB investors are honing in on the weekly 21.50-strike options

by 11/5/2012 1:01 PM
Stocks quoted in this article:

The shares of Facebook Inc (NASDAQ:FB - 21.28) are headed higher in afternoon trading. However, it looks like some options traders are gambling on some short-term volatility for the social networking concern, as evidenced by today's appetite for weekly option contracts.

Specifically, traders are flocking to FB's weekly 21.50 strike, which has seen roughly 8,300 calls and 5,800 puts change hands. The majority of the contracts have crossed the tape at the ask price, and volume has exceeded open interest on both sides of the aisle, pointing to buy-to-open activity.

By purchasing the calls to open, the buyers are expecting FB to muscle atop the $21.50 level by the end of the week, when the weekly options expire. In fact, the volume-weighted average price (VWAP) of the calls is $0.36, meaning the buyers will reap a reward if FB conquers the $21.86 level (strike plus average premium paid) by Friday's closing bell. On the flip side, the VWAP of the puts is $0.56, indicating a breakeven level of $20.94 (strike minus average premium paid) for the buyers.

Technically speaking, the shares of FB have outperformed the broader S&P 500 Index (SPX) by more than 13 percentage points during the past 40 sessions. Nevertheless, the options crowd remains wary of the stock. The security's Schaeffer's put/call open interest ratio (SOIR) sits at 1.45, indicating that puts outnumber calls among options with a shelf-life of three months or less. Plus, the equity's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.29, suggesting option buyers have initiated more bearish bets than bullish during the past couple of weeks.

In the front-month series, the November 20 strike is most popular, with more than 3,100 puts outstanding. In the short term, this glut of pessimistic positions could translate into an options-related foothold for FB.


permalink

Featured Brokers
ADVERTISEMENT
Unusual Option Volume
Option Flow
ADVERTISEMENT
ADVERTISEMENT
Most Active Stocks
Most Active Option Strikes
Largest Open Interest

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.