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.)
Share this article with your friends


Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »