Facebook, Inc. (FB) Option Bulls Bet On a Round-Number Breakout

Facebook Inc (FB) calls are popular once again


Published on Feb 26, 2015 at 10:53 AM
Updated on Apr 20, 2015 at 5:32 PM

Bullish speculators haven't been able to get enough of Facebook Inc (NASDAQ:FB) lately. Looking at two weeks' worth of data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a call/put volume ratio of 2.90 for the stock, a number that outranks 94% of all similar readings from the past year. The call-focused trend is continuing today, with the contracts trading at twice the usual mid-morning pace.

On a closer look, speculators are targeting the round-number $80 level for FB. For example, the weekly 2/27 80-strike call has seen notable attention, with data suggesting buy-to-open activity. The equity was last seen at $80.60, meaning these calls are now in-the-money. However, for the speculators to see a profit from their bets, the shares need to eclipse the at-expiration breakeven level of $80.97 (strike plus the volume-weighted average price of $0.97) by the close on Friday. FB's intraday high thus far stands a penny above this level.

Another 80-strike that's possibly being bought to open is the March 80 call. These traders are giving the security more time -- through the close on Friday, March 20 -- to accumulate gains above $80.

Option traders are not the only ones who are bullish on FB. On the Street, 27 out of 29 covering analysts say Facebook Inc (NASDAQ:FB) is a "strong buy." It's no wonder, given the equity's long-term success. With today's 1.2% increase, the shares have tacked on roughly 17% over the past 52 weeks.

Daily chart of Facebook Since February 2014

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