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Facebook Inc (NASDAQ:FB - 27.10) notched a fourth consecutive daily gain yesterday, adding 3.6% by the time the closing bell rang. Not surprisingly, calls were the options of choice on the stock, with roughly 234,000 of these contracts crossing the tape. This was almost double FB's average single-session call volume, and more than twice the number of puts traded.
Receiving notable attention was the weekly 26.50 strike, which saw nearly 13,700 calls change hands at a volume-weighted average price (VWAP) of $0.53 each. A large portion of the volume -- which exceeded open interest -- traded at the ask price, suggesting they were bought. According to Trade-Alert, several thousand of these contracts represented newly established bets. However, open interest at this strike declined by nearly 3,000 contracts overnight, pointing to net liquidation activity. In the case of the bought-to-open calls, speculators are betting on the stock to keep climbing north of $27.03 (strike price plus VWAP) through expiration later today.
This uptick in call volume marks a change of pace for the social networking site. The security's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio sits at 1.03, confirming puts bought to open have slightly outnumbered calls during the past month. Similarly, Schaeffer's put/call open interest ratio (SOIR) for FB checks in at 1.22, with puts outstripping calls among options scheduled to expire in the next three months.
This pessimistic attitude can be found outside of the options pits, as well. Short interest on FB spiked by nearly 30% during the last two reporting periods, and now accounts for more than 7% of the stock's available float. However, should the equity continue to trek higher, it could end up benefitting from a short-covering rally down the road.
Meanwhile, although the FB sentiment scales are bullishly tipped among the brokerage bunch, there are still a number of holdouts. The security sports 19 "buy" or better endorsements, compared to eight tepid "holds" and one "strong sell" rating. This leaves some wiggle room for future upgrades, which could push the stock even higher.
FB has been on a technical tear lately, gaining more than 29% this month alone. Also, the shares have climbed steadily higher since their lockup expiration in mid-November. In fact, yesterday's surge pushed the security atop the $27 level for the first time since late July -- obviously good news for Thursday's weekly call players.