Short-Term Traders Split on Facebook Inc (FB) Amid 'Reactions' Addition

Weekly option traders are rolling the dice on Facebook Inc (FB), after the social media firm announced a new set of buttons

Feb 24, 2016 at 11:34 AM
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Despite my previous protestations, Facebook Inc (NASDAQ:FB) finally went there ... sort of. No, the social network technically didn't add a "dislike" button, but it did add an array of other emotion buttons, including "love" and "angry," a feature the company is dubbing Reactions. If FB's stock price is any indication, traders aren't liking the decision, with the stock last seen 1.8% lower at $103.60.

Meanwhile, FB weekly options are on fire. In fact, the weekly 2/26 series accounts for nine of the stock's 10 most active options. In the lead is the weekly 2/26 104-strike call, where some buy-to-open activity is detected, as confirmed by International Securities Exchange (ISE) data. In other words, these buyers think FB will bounce back atop $104 by Friday's close, when the series expires.

On the other hand, ISE data indicates other traders are selling to open the stock's weekly 2/26 105-strike call. These option writers apparently think the $105 level will act as resistance between now and week's end.

Taking a step back, though, put buying has been the strategy of choice in recent weeks at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, FB's 10-day put/call volume ratio across those exchanges is 0.64, ranking just 4 percentage points from an annual high.

Elsewhere, the brokerage crowd has grown extremely optimistic toward the social media maven. Specifically, 27 of 28 analysts rate FB a "buy" or better, compared to one "hold" and not a single "sell" opinion.

Apparently, these bulls aren't concerned that Facebook Inc (NASDAQ:FB) has pulled back 12% from its all-time high of $117.59, notched earlier this month. Nor are they troubled by heavy accumulations of call open interest at the overhead March 105 and 110 strikes, which could act as resistance. Should FB continue to struggle, a round of downgrades could send the social media stock back into double-digit territory.

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