Bullish Betting Hot as Facebook Bounces from 200-Day

Call buying has already been popular on FB stock

Oct 3, 2019 at 3:13 PM
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Facebook, Inc. (NASDAQ:FB) stock is up 2.7% at $179.23, on news the social media giant is launching a camera-first messaging app for Instagram users called "Threads," that's reportedly similar to Snap's (SNAP) Snapchat. The upside move has FB bouncing from its 200-day moving average -- and options traders betting on even bigger gains.

With about an hour left in today's trading, around 145,000 calls and 73,000 puts have traded, about 1.4 times what's typically seen at this point. The weekly 10/4 177.50-strike and 180-strike calls are most active, and it looks like new positions are being purchased here. If this is the case, call buyers expect today's rally to continue through expiration at tomorrow's close.

Widening the scope reveals call buying has been popular in recent weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FB's 10-day call/put volume ratio of 2.40 ranks in the 75th annual percentile, meaning long calls have been initiated relative to puts at a quicker-than-usual clip.

The weekly 10/25 185-strike call has seen the biggest increase in open interest over this two-week time frame, with more than 15,300 contracts added. Data from the major options exchanges confirms notable buy-to-open activity here, as traders target a move above $185 by the close on Friday, Oct. 25.

FB shares were trading north of here as recently as Sept. 24, before the FAANG stock was hit with broad-market headwinds that had it closing last night below $175. As noted, Facebook's 200-day trendline stepped in as reliable support, with this moving average also serving as a springboard for the share back in early June.

fb stock daily price chart on oct 3


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