Facebook Inc (FB) Woes Entice Fresh Batch of Option Bears

Option bears continue to target Facebook Inc (NASDAQ:FB), as the stock remains under pressure

Nov 16, 2016 at 11:22 AM
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Sentiment in Facebook Inc's (NASDAQ:FB) options pits has turned bearish recently, as tech stocks struggle in the aftermath of Donald Trump's election win and amid reports Snapchat is in the early stages of filing its IPO. For instance, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio has jumped 49% in November, with the current reading of 0.76 ranking in the 94th annual percentile. This trend is continuing today in FB's options pits. 

At last check, FB's single-day put/call volume ratio registered at 0.94 -- on track to close in the 98th percentile of its annual range, as put volume trades at almost two times the expected intraday pace. The most popular option is the December 110 put, where there appears to be a mix of buying and selling activity taking place, although it's not clear whether positions are being opened or closed. The November 115 and 117 puts are close behind, with traders possibly closing positions ahead of front-month options expiration at this Friday's close. 

One option that is seemingly seeing more straightforward buy-to-open activity is the November 114 put. If this is the case, these speculators are betting that FB shares will breach the $114 level by Friday's close. However, given FB's recent struggles on the charts, part of this action could be at the hands of shareholders protecting paper profits against additional near-term losses.

Regardless, Facebook's technical setup has been less than encouraging of late. Following a poorly received earnings report early this month, the shares gapped beneath their 100-day moving average -- a long-time level of support -- while also giving up the round $120 level, home to FB's May highs. This negative price action is continuing today, with FB stock down 0.4% at $116.95. 

The fundamental front has also been shaky for Facebook Inc (NASDAQ:FB). The company just admitted it miscalculated some of its performance metrics, suggesting new figures may be materially different than what publishers are used to. This comes less than two months following a similar mishap for the social media giant.

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