Options Trading News

October 29, 2013  Tue 12:14 PM CT


Facebook has been running like a horse, and now traders are collaring gains.

The social-media stock already sees volume of more than 400,000 options, but a single long-term combination in January 2015 dominates the action: More than 58,000 contracts each trade in the 47 puts and the 55 calls traded. A large block of 44,500 contracts saw the calls sold for their bid price of the $8.05 and the puts bought at their $8.35 ask price of $8.35. Volume surpassed open interest in both, so new positions were initiated.

While bearish, the trade was likely done against stock as a hedge. They paid $0.30 and now have protection below $46.80. He or she must also unload their shares for $55 if they close above that level on expiration.

FB rose 0.04 percent to $50.25 in afternoon trading, and has doubled after falling below $24 in July. It hit an all-time high of $54.83 two weeks ago, so today's trade is looking to that level as a top.

The next earnings report is scheduled for after the closing bell tomorrow.

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