Options Trading News

March 28, 2013  Thu 4:10 AM CT

Facebook bounced yesterday, and fast-money traders have been all over the stock.

optionMONSTER's Heat Seeker monitoring system detected money flowing into the short-term 24.50 weekly calls on Tuesday. More than 5,000 were purchased, mostly for $0.90 to $1.01. The contracts were in the money at the time, giving them a tight correlation to the social-media stock. For investors targeting a quick move, these were the perfect instruments.

They were already counting their profits the next day as FB advanced 3.53 percent to $26.09. But that was nothing compared with the move in the options, which at one point traded as high as $1.67. That's leverage of more than 16 times!

FB had been drifting lower since early February, when it stalled around the same $32 level that's been resistance since last summer, shortly after its initial public offering. But now it's bouncing around the same $25 level that was support in late 2012. It's also the 200-day moving average.

Some 281,000 contracts traded in FB yesterday, almost quadruple the daily average. Weeklies accounted for more than 30 percent of the total.
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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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