Eleventh-Hour Option Bulls Flock to Facebook Inc (FB)

Facebook Inc's (FB) weekly 10/28 series of options is extremely popular today

Oct 28, 2016 at 12:40 PM
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Ahead of next Wednesday night's earnings report, Facebook Inc (NASDAQ:FB) call options are in high demand. The contracts are running at double the usual intraday rate, and dwarf puts 170,000 to 87,000. Looking more closely, eleventh-hour traders are dominating, with the weekly 10/28 series heavily in play.

The series, which expires at the close today, accounts for the seven most active FB strikes. The top two positions -- with over 28,000 contracts apiece -- belong to the weekly 10/28 131- and 132-strike calls. Both are now in the money, with the social media stock up 2.3% at $132.70. However, potential buyers of these positions are banking on even more upside through the closing bell.

Taking a step back, data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) confirms call buying has been all the rage in recent weeks. Specifically, FB's 10-day call/put volume ratio is 1.77, with long calls nearly doubling puts.

Underscoring the dominance of call traders is Facebook's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.47. Based on this ratio -- which looks at near-the-money options in the front-month November series -- call open interest more than doubles put open interest.

The collective optimism makes sense after looking at Facebook Inc's (NASDAQ:FB) long-term chart. Year-to-date, the social media stock has soared roughly 25%, and earlier this week topped out at a record $133.50. While a specific catalyst for today's gains is hard to determine, FB may be getting a boost from reports of a new product that resembles Snapchat.

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