Options Trading News

December 14, 2012  Fri 5:18 AM CT

Option activity was extreme in Facebook yesterday, and some traders made some fast money.

optionMONSTER's Heat Seeker tracking system showed heavy activity in the Weekly 28.50 calls that expire today. Those options went for $0.05 in the morning with the stock down around $27.70, but when FB started inching higher those calls ramped up to $0.45.

Long calls lock in the price where investors can buy shares, so they have the ability to generate big leverage when a stock rallies. But if the shares don't rise, yesterday's contracts will lose all of their value when the closing bell rings today. (See our Education section)

FB rose 2.39 percent to $28.24 yesterday and saw total option turnover of more 287,000 contracts, twice its daily average. That volume was enough to make the social-networking company the fourth most-active name in the entire option market.

Disclosure: I own FB shares.

(A version of this post appeared on InsideOptions Pro yesterday.)
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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