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 art of trading

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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