Note: This post was written by Brian Stutland, President of Stutland Equities and a contributor to CNBC's "Options Action."
On Friday we saw some unusual options activity on Facebook.
We watched someone sell 12,500 Oct. 19 FB puts for $0.15. This trade makes money if FB is above 19 at October expiration
-- which would be 16% below Friday's close.(Track Facebook Here)
Often traders will sell a put on a stock that they would like to own at a level at which they would be willing buyers. If the stock is below the strike, their option is exercised and they will be "put" the stock. If the stock rises, they get to keep the premium collected for selling the option, which is like being paid to wait for a good entry point. (Read More: Barron's Slams Facebook, Stock Falls)
Brian Stutland is the President of Stutland Equities and a contributor to CNBC's "Options Action."
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