Options Trading News

July 19, 2013  Fri 9:43 AM CT

A huge trade in Facebook is apparently aimed at protecting shares against a pullback.

More than 191,000 FB options have traded so far, more than twice its daily average in the last month. Much of the volume is in a January 2015 combination.

optionMONSTER systems show that a trader bought 60,000 of the 22 puts at that long-term strike for the ask price of $2.50 and sold the same number of the 32 calls for $2.18. These are new opening trades, as volume was above the previous open interest at both strikes.

The overall trade is very likely a collar to protect a long-stock position. This could be a fund with a large holding in FB or someone within the company who is looking to hedge a concentrated position. (See our Education section)

FB is down 1.53 percent to $25.78 this morning. Shares of the social-networking company dipped to support at $23 in early June, but Wednesday's close was its highest since mid-May. The stock has only posted only one close above $32 in the last year, at its February high.
Share this article with your friends

Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »