Options Radar: Facebook Inc (FB), LinkedIn Corp, and Zillow Inc

Reviewing notable options activity on Facebook Inc, LinkedIn Corp, and Zillow Inc

Nov 17, 2014 at 11:12 AM
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Option traders have taken a shine to social networking sites Facebook Inc (NASDAQ:FB) and LinkedIn Corp (NYSE:LNKD), as well as real estate site Zillow Inc (NASDAQ:Z). Here's a look at how speculators have been placing their bets on FB, LNKD, and Z.

  • Facebook Inc (NASDAQ:FB) jumped out of the gate, as traders weighed chatter of the company's foray into professional networking. However, the shares of FB have since erased their early gains to trade 0.1% lower at $74.80. Nevertheless, the hype has fueled demand for FB's short-term options, as the stock's 30-day at-the-money (ATM) implied volatility (IV) has edged 6.5% higher to 28.4%. Calls are especially popular once again, trading at a 16% mark-up to the average intraday pace, and outnumbering puts by a margin of nearly 3-to-1. Digging deeper, it looks like a few bulls are buying to open the November and December 75-strike calls, where a healthy portion of the action has transpired on the ask side, and IV is heading north. By purchasing the calls to open, the buyers expect FB to climb atop $75 by the contracts' respective expiration dates.

  • On the flip side, concerns about escalating competition from FB have pushed LinkedIn Corp (NYSE:LNKD) 3.9% lower to $224.70. As such, short-term bears are circling LNKD; intraday put volume is running at a 68% mark-up to the norm, and the equity's 30-day ATM IV has popped 7% to 33.1%. Bears are gambling on LNKD to breach $220 by the end of the week, buying to open the November 220 put. Nearly two-thirds of the puts have changed hands on the ask side, and IV has shot 5 percentage points higher at the strike -- underscoring our suspicions of newly bought bearish bets.

  • Finally, Zillow Inc (NASDAQ:Z) is up 6.3% at $120.88 on no apparent news, bringing its year-to-date gain to nearly 48%. Speculators are rolling the dice on more short-term upside, with calls trading at six times the average intraday pace, and Z's 30-day ATM IV 9.1% higher at 51.6%. Most active is the November 120 call, where IV has jumped 18.7 percentage points, and more than half of the contracts have traded on the ask side. By purchasing the calls to open, the buyers expect Z to extend its trek north of $120 through the end of the week, when front-month options expire. Risk, meanwhile, is limited to the initial premium paid for the calls, should Z settle beneath the strike at expiration.
 

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