Schaeffer's 43rd Anniversary Stock Picks in 2024

Analyst: Regulatory Scrutiny Could Be a Positive for These FAANG Names

FB and GOOGL both hit record highs in the past month

Managing Editor
Jul 11, 2018 at 3:04 PM
facebook X logo linkedin

Facebook, Inc. (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOGL) both received bull notes since yesterday's close. Below, we're going to take a closer look at shares of FB and GOOGL to see how they're trading today.

Facebook Options Are Attractively Priced

Facebook stock has managed to carve out a path of higher highs this summer, even amid data privacy concerns that could result in fines from the European Union (EU). Earlier today, Nomura initiated coverage on FB with a "buy" rating and $228 price target, noting that the increased regulatory scrutiny could ultimately favor the tech giant.

Although FB stock is fractionally lower to trade at $203.43 today amid broad market headwinds, it scored a fresh record high of $205.80 on Monday. Overall, the security has added 31% year-over-year, and has relied on support from its ascending 30-day moving average since a late-April bull gap. 

FB Stock Chart Sectors

In the options pits, calls have held a distinct advantage. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day call/put volume ratio of 1.96, ranking in the 75th percentile of its annual range.

The weekly 7/13 205-strike call saw the largest increase in open interest during this time frame, adding nearly 11,000 contracts. Most of the activity at this strike has been of the buy-to-open kind, indicating options traders expect FB stock to rally within the next few days, since the options expire this Friday.

What's more, now seems to be a great time to target short-term options on the social media concern. This is according to its Schaeffer's Volatility Index (SVI) of 23%, which ranks in the 26th percentile of its annual range. 

GOOGL Calls Hot As Stock Climbs

Similarly, Nomura also initiated coverage on Alphabet stock with a "buy" rating, as well as a $1,400 price target. GOOGL, which at last check was up 0.6% to trade at $1,174.14, is fresh off a record high of its own, hitting $1,201.49 on June 20. Subsequent pullbacks have been held in check by the shares' 50-day moving average, a trendline of support in place since early May.

GOOGL Stock Chart Sectors

Like Facebook, the attitude in the options pits is call-skewed. The equity's Schaeffer's put/call open interest ratio (SOIR) sits at 0.70, indicating calls handily outnumber puts among options set to expire within three months. This ratio is at the bottom of 5th percentile of its 52-week range, suggesting near-term traders have rarely been more call-biased on GOOGL during the past year. Digging deeper, the weekly 7/13 1,180-strike call saw the largest increase in open interest during the past 10 days, followed by the 1,170- and 1,190-strike calls from the same series.


A.I.’s Dirty Little Secret: The Real Power Behind The AI. Boom ✨

Anyone who’s seen the The Matrix movies knows that A.I. needs power.  Lots and lots of power.

If you’ve seen the movie, you also know the grizzly results of the ensuing battle for that power.

Now, Wall Street’s battle for A.I. power won’t go to such extremes. Hopefully?

A.I. needs more power and that means more opportunities for stock traders in the know.

Download your free copy of “The A.I. Revolution: 4 Stocks to Buy Now”!