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Traders bet on record Facebook highs

Traders are liking Facebook.

Shares of the social media giant have rallied 17 percent in the last year, and the company now has a market cap worth 24 percent more than Disney. And on Tuesday, some options traders bet the stock will make record highs.

Call volume Tuesday was three times that of puts, and in the largest single trade on the name, someone bought 6,000 of the Facebook May 87.50 calls for $1.13 each. Since each contract is for 100 shares, the trader is betting $678,000 that Facebook will move above $88.63—9.4 percent higher than current levels—sometime over the next two months.

"This trader is playing for a massive breakout to the upside," said Dan Nathan, co-founder of RiskReversal.com and a CNBC contributor.

Facebook shares have been trapped in a $10 range for the past nine months, with $82.17—the record high set in December—marking the upper bound. Nathan noted that the stock appears to be consolidating.

"Look at this base that has been there for six months," said Nathan.

While Facebook shares rallied, the price of the company's options have remained relatively muted. The stock's implied volatility—a rough measure of puts and calls—is currently trading at its lowest level in more than a year, indicating that traders don't expect violent moves from the stock anytime soon.

But just because the notional value of Facebook's options is low doesn't necessarily mean that they are cheap. In fact, according to Nathan, it's just the opposite. The amount that Facebook stock is actually moving is considerably near to what the options market is predicting. And that, according to Nathan, could make owning outright calls, a "a painful endeavor."

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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