OptionsHouse

Options Trading News

July 19, 2013  Fri 9:43 AM CT

FB: SEE CHART GET CHAIN FIND STRATEGIES
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


Related Stories

FB

Why bulls are logging on to Facebook

June 22, 2015

The social network's shares have been range-bound for almost a year despite strong earnings but have picked up momentum since testing support at their 200-day moving average in early May.

OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »