Call Players Pile On as Facebook, Inc. (FB) Hits Record High

Facebook Inc (FB) hit its highest perch on record earlier

by Karee Venema

Published on Mar 19, 2015 at 10:57 AM
Updated on Apr 20, 2015 at 5:32 PM

Facebook Inc (NASDAQ:FB) is having a breakout session, and it's not even lunchtime yet. Specifically, the stock hit a record high of $82.74 earlier, and was last seen up 1.9% at $82.41. In the equity's options pits, call volume has soared to three times what's typically seen at this point in the day, and based on FB's 30-day at-the-money implied volatility -- which is 4.9% higher at 24.4% -- short-term contracts are in high demand.

In fact, eight of FB's 10 most active options are calls that expire in the next four weeks, with the equity's March 82 strike seeing the most action. There appears to be some buy-to-open activity happening here -- a theory echoed by data from the International Securities Exchange (ISE) -- meaning traders expect FB to extend its lead north of $82 through tomorrow's close, when front-month options expire.

Today's accelerated call activity just reflects the withstanding trend witnessed in FB's options arena. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 3.07 ranks in the 95th annual percentile. In other words, calls have been bought to open over puts at a faster clip just 5% of the time within the past year.

This optimism is mirrored elsewhere on the Street, as well, which shouldn't be too surprising considering Facebook Inc (NASDAQ:FB) has surged 23% year-over-year. Of the 30 analysts covering the shares, 28 maintain a "buy" or better rating, with not a single "sell" to be found. Plus, the average 12-month price target of $91.89 stands in territory yet to be charted.


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