Facebook, Inc. (FB) Puts Active Amid Overseas Legal Drama

Facebook Inc (NASDAQ:FB) is lower on news that the company is being taken to court in Belgium

by Josh Selway

Published on Jun 15, 2015 at 12:34 PM
Updated on Jun 24, 2020 at 10:16 AM

Facebook Inc (NASDAQ:FB) is off 1.4% today at $80.40, on news that regulators in Belgium are taking the company to court over data protection concerns. Now, option bears are rushing in, as puts are trading at an accelerated pace. One strike seeing apparent buy-to-open activity is the June 80 put, as traders bet on FB breaching $80 by the close this Friday, when front-month options expire. 

With today's slide, delta on the option has jumped from negative 0.25 at Friday's close, to negative 0.42 today, meaning there's about a 42% of the option finishing in the money. Regardless, traders are scooping up short-term FB options at a relative bargain. This, according to the stock's Schaeffer's Volatility Index (SVI) of 21%, which is only 6 percentage points from an annual low. 

FB isn't used to this pessimistic outlook. For one, 2.51 calls have been bought to open for every put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the past 50 sessions. Also, analysts are extremely bullish, with 25 of 28 saying the shares are a "buy" or better. 

On the charts, Facebook Inc (NASDAQ:FB) has added nearly 5% since taking a bounce off its 200-day moving average in mid-May. What's more, the stock has put in a modest outperformance relative to the S&P 500 Index (SPX) over this same time frame.


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