The big surprise today is that the economy shrank in the 4th quarter of 2012. The market did not really care most of the day, as the SPX traded a near term high of 1509.54. The fact that the government is starting to reduce its influence on the economy is probably for the best. If we get out for just modest declines in GDP, that will bode better in the long term. Take the short term medicine now versus a big slug in 4 years. What I think this does is draw a picture of lower realized market volatility for a while. It might not stay at 4% like it is but it could stay in the low 10’s. That brings me to the Facebook trading.
I promise this will be one of the only Facebook options posts I put up over the next few weeks. However, I wanted to make sure that I pointed out a few interesting tidbits about options on facebook that, maybe, the average retail trader might not have noticed. Stuff everyone should know before reading the rest of this piece:
As the market winds up for the big Facebook IPO, the other Social Networking stocks are showing signs of a strain. This blog has covered Groupon (GRPN) and some of the stock borrowing issues facing names with relatively small floats. ZNGA has a relatively generous float compared to its other Social Media stocks, so the borrow issues were not too bad. But the markets, like the weather in Chicago, change hour to hour, day to day. ZNGA has had a nice run, and the shorts are starting to really pile in. Take a look at the chart of ZNGA now that the name has gone a bit hard to borrow.