Facebook Stock Extends Rally Ahead of Quarterly Report

Facebook calls are king today

Deputy Editor
Apr 29, 2020 at 3:15 PM
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The shares of Facebook Inc. (NASDAQ:FB) are extending their rally today, up 7.4% at $196.52, in anticipation for the social media giant's first-quarter earnings report, due out after the close this afternoon. The security is up an impressive 43% off its mid-March lows, with help from its ascending 10-day average, and is set to topple its 100-day trendline for the first time since a late-February bear gap. Below, we'll dig in to the sentiment surrounding FB leading up to its quarterly event, and what the options market expects for the stock going forward. 

FB Apr 29

A look at analyst sentiment paints an extremely optimistic picture, with all 24 covering the security calling it a "buy" or better. Plus, the consensus 12-month target price of $218.89 is an 12% premium to current levels, and sits right beneath FB's record high of $224.20. 

Options players, on the other hand, have rarely been more bearish in the past 12 months. While calls are still outnumbering puts on an overall basis, per FB's 50-day put/call volume ratio of 0.63 at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), a reading that sits in the 99th percentile of its annual range. Echoing this, Facebook's Schaeffer's put/call open interest ratio (SOIR) of 0.89, which sits higher than 95% of all other readings from the past year. 

Drilling down to today's trading, 235,000 calls and 159,000 puts have exchanged hands so far. The most popular option by far is the 5/1 200-strike call, with positions being opened here. Meanwhile, traders are also opening positions at the 210- and 195-strike calls from the same weekly series. 

Looking back, FB tends to do well the session after earnings. During its last eight quarterly reports, Facebook enjoyed five positive next-day returns, averaging a 7.3% swing, regardless of direction. This time around, the options market is pricing in a slightly bigger 10% post-earnings move. 

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