Facebook is expected to post its quarterly results after the close this afternoon
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.
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.