Short-Term Calls Hot On Facebook, Inc. (FB)

Facebook Inc (NASDAQ:FB) calls are trading at two times the average intraday pace

May 14, 2015 at 12:15 PM
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Facebook Inc (NASDAQ:FB) has struggled on the charts since reporting earnings in late April. Today, the shares are on the mend -- up 3.1% at $80.87 -- following reports the social media magnate has thrown its hat into the minimum wage dialogue. Option traders are responding in kind, with calls changing hands at two times the average intraday rate, and similar to Apple Inc. (NASDAQ:AAPL), short-term contracts are popular.

Specifically, speculators are buying to open FB's May and weekly 5/29 80-strike calls, which are the stock's two most active options. In other words, these call buyers are rolling the dice on the equity to extend its lead over the round-number mark through the respective expiration dates at tomorrow's close and the close on Friday, May 29.

Today's accelerated call activity just echoes the withstanding trend seen in FB's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 3.08 ranks a mere 5 percentage points from an annual peak.

Regardless of Facebook Inc's (NASDAQ:FB) recent technical woes, now appears to be an opportune time to purchase short-term options on the stock. Not only did the equity's 30-day at-the-money implied volatility hit a 52-week low earlier, but its Schaeffer's Volatility Index (SVI) of 23% rests lower than 94% of all comparable readings taken in the past year. In other words, premium on the stock's near-term options is pricing in low volatility expectations at the moment.


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