Short-Term Traders Bet On a Facebook, Inc. (FB) Bounce

Facebook Inc (NASDAQ:FB) is opening up Internet.org to developers

by Alex Eppstein

Published on May 4, 2015 at 2:32 PM
Updated on Jun 24, 2020 at 10:16 AM

Short-term options traders have set their sights on Facebook Inc (NASDAQ:FB), fresh off the social network's launch of an open platform for its Internet.org initiative. The stock's two most active options are the weekly 5/8 79- and 82-strike calls, which are seeing buy-to-open activity. In so doing, the speculators anticipate FB will topple the respective strikes by this Friday's close, when the weekly series ceases trading.

Taking a step back, call buyers have been very active in recent months across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). FB's 50-day call/put volume ratio across this trio of exchanges is 2.69, which rests just 7 percentage points from a 12-month high. However, now is an opportune time to buy FB's short-term options. The security's Schaeffer's Volatility Index (SVI) of 22% stands higher than just 6% of all other readings from the past year, suggesting FB's near-term contracts are attractively priced right now, relatively speaking.

The brokerage bunch is also optimistic. Twenty-seven of 30 analysts rate FB a "buy" or better, versus just three "holds" and not a single "sell."

And why not? Facebook Inc (NASDAQ:FB) has been a long-term technical outperformer. While the shares are off 0.3% this afternoon at $78.73, they're up 29% year-over-year. The stock is also currently consolidating atop its 120-day moving average -- located at $78.48 -- and could be on the verge of a bounce.

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