Most Active Weekly Options: Facebook (FB)

Facebook Inc option traders gamble on end-of-week downside

Oct 20, 2014 at 12:37 PM
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The 20 stocks listed in the table below are the S&P 500 Index (SPX) components that have attracted the highest weekly options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Facebook Inc (NASDAQ:FB), as option traders roll the dice on an end-of-week retreat.

Most Active Weekly Options Table

Facebook Inc is trading 1.1% higher today to linger near $76.78, following reports King Digital Entertainment PLC (NYSE:KING) is planning to launch its new "Candy Crush" game on FB and smartphones in coming weeks. Option traders aren't buying today's positive price action, though, and are scooping up puts at a faster-than-usual clip.

Drilling down, FB's weekly 10/24 75-strike put has garnered the most attention, with 18,265 contracts on the tape at last check. The majority of these puts have traded at the ask price, implied volatility has jumped 9.9 percentage points, and fewer than 3,400 contracts are currently in residence here. Summing it all up, it appears new positions are being purchased.

By initiating the long puts, traders are expecting FB to breach the $75 mark by week's end -- when the weekly series expires. The options market isn't too confident the put will be in the money at Friday's close, as delta on the option is docked at negative 0.30.

Looking ahead, Facebook Inc (NASDAQ:FB) is slated to take its turn in the earnings confessional after the close next Tuesday, Oct. 28. While this scheduled event resides outside of the lifetime of the aforementioned puts, today's bearish bias echoes the withstanding trend witnessed in FB's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 10-day put/call volume ratio of 0.74 ranks higher than all other readings taken in the past year. This, despite the fact that FB has averaged a single-session post-earnings gain of 5.2% over the past four quarters.

 

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