Bearish Action in Facebook (FB) Options

FB – Facebook Inc. – Shares in Facebook are rebounding today, up 2.3% at $47.25 as of 10:45 a.m. EST, but options activity on the stock this morning suggests some traders are positioning for the price of the underlying to continue lower in the near term. The stock is down approximately 14% since reaching an all-time high of $54.83 back October 18th.

Big prints in the Nov 29 ’13 $45 strike put options caught our attention today, with upwards of 13,600 contracts traded thus far in the session versus open interest of 4,261 contracts. It looks like most of the puts were purchased near the open at a premium of $0.94 each. Traders long the $45 puts stand ready to profit at expiration in a couple of weeks in the event that Facebook shares drop 6.75% from the current price of $47.25 to trade below the breakeven point at $44.06.

Overall options volume on FB is relatively light, with roughly 110,000 contracts in play versus the stock’s average daily volume of nearly 700,000 contracts. Calls are slightly more active than puts as of the time of this writing, with the call/put ratio hovering near 1.3.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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