Facebook Can’t Shake Bearish Options
The social network is losing face in the option market.
Put volume is surging in Facebook today as investors look for the stock to continue its post-initial public offering slide. More than 200,000 contracts have traded so far today, trailing only Apple in option volume for individual companies. But unlike the case in Apple, traders are buying puts in Facebook.
The July 27 puts are the most active, with large blocks pricing for $2.50 and $2.60. More than 6,600 of those contracts have crossed OptionMonster’s tracking systems so far today. There is also heavy activity in the July 23s, as well as the June 27s that expire next Friday and the following week.
Facebook shares are down another 3.85 percent to $27.10 in afternoon trading, having touched a new low of $26.83 earlier in the session. The stock is down about 29 percent from the $38 level where it went public on May 18. Facebook options became available only at the beginning of this week.
Some 78,000 calls have traded in the name, but those also reflect a bearish sentiment because sales outnumber purchases by almost 2 to 1. This means that traders are willing to sell the stock and believe that upside is limited.
Additional News: Facebook Options Volume Explodes as Stock Hits New Low
- Options Tips From Jon Najarian
- Read the CNBC Stock Blog
- Options Tips From Pete Najarian
Options Trading School:
David Russell is a reporter and writer for OptionMonster. Russell has no positions in Facebook.