Options Trading News

December 31, 2013  Tue 9:24 AM CT

Facebook has come off its highs in recent days, but one large trader apparently believes that further losses will be limited.

optionMONSTER systems detected the sale of 5,000 April 50 puts for $3.16. This is clearly a new position, as open interest in the strike was just 255 before the trade appeared.

The put seller is looking for FB to hold above $50 through expiration in mid-April, at which time the $3.16 would be kept as profit. The trader takes on the risk of having to buy shares if they are below that level. (See our Education section)

FB is up 0.9 percent to $54.19 this morning. The social-networking stock was at a high of $58.58 last week and were last below $50 on Dec. 11. 
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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.

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