Facebook Stock Takes Another Jump From Bullish Trendline

FB options traders may be eyeing a big move by January

Josh Selway
Aug 29, 2019 at 2:36 PM
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Facebook, Inc. (NASDAQ:FB) is trading up 2% today, last seen at $185.46, rising with the broader tech sector. This move to the upside comes after a recent meet-up with the 160-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White, the last three encounters with this trendline have sparked an average one-month gain of 6.2%. Looking at it another way, the shares have only closed below the moving average once since their January bull gap.

facebook stock aug 29

Options traders are playing this bounce, too, with new positions being opened at the weekly 9/6 190-strike call and 8/30 185-strike call. Based on FB's Schaeffer's Volatility Index (SVI) of 28%, which ranks in the 15th annual percentile, it's not a bad time to purchase near-term contracts, as options have priced in lower volatility expectations just 15% of the time in the past year.

From a broader view, peak open interest on Facebook stands at the January 2020 270-strike call. Right below there, however, is the front-month September 200 call, where 42,262 contracts reside -- helping explain why the Schaeffer's put/call open interest ratio (SOIR) of 0.70 is more call-heavy than normal, ranking in the 32nd annual percentile.

While FB stock is already up almost 42% year-to-date, analysts see much more upside in the year ahead. By the numbers, the security's average 12-month price target of $232.33 represents a 25% premium to current levels, and record-high territory.


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