FB

Classic Example of An Earnings Vol Crush: FB Edition

Submitted by msebastian on Thu, 05/02/2013 - 4:05pm

One of the most followed stocks on the NASDAQ, FB, had earnings last night. There was HUGE volume yesterday ahead of earnings and May3 weekly volatility got to 150% ATM. FB actually made a decent move by the end of the day today, moving up to near 29.00 a share. But, those who bought upside calls are probably NOT happy. Take a look at a shot of the FB May3 29 calls from yesterday.

LivevolX (r) www.livevol.com

Notice that high IV of near 140%. Notice the price of the calls is above .50 a contract. Take a look at what happened to FB volatility today.

Retail Investors are Getting Killed

Submitted by msebastian on Thu, 04/18/2013 - 4:34pm

I am a firm believer that the mini options are going to be a great thing for the retail trader long term, as long as the retail trader can steer clear of Television. There are 2 trades we hear more about on CNBC than any other trades. Those trades are GLD and AAPL. CNBC chatter is indicative of where the retail trader is investing. I wonder why the retail trader is still out of the market:

LivevolX (R) www.livevol.com

If we want to add in a third media darling, we can add Facebook. Here is a chart of the returns of these two trades:

Gotta like this...

Submitted by atg on Fri, 03/01/2013 - 4:24pm

The market had a bit of a reversal on Thursday for what reason I cannot quite figure out. Maybe politics but the economic news all week has been ok. Today there is the big shrug on the Sequester so maybe the politics will start to seep out of the market. One could hope. One name that took off on the close yesterday was Facebook (FB). FB spent most of the day in the mid-26 level only to ignite on the close to close 27.25. It was like all the sellers went home after the whatever deal was announced with MSFT. What it left at the end of the day was a really flat term structure.

Did the FB options out price the earnings?

Submitted by atg on Wed, 01/30/2013 - 6:15pm

The big surprise today is that the economy shrank in the 4^th 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.

Kersplat goes the implied volatility in FB now what to do?

Submitted by atg on Tue, 01/15/2013 - 6:35pm

We have spent a lot of time in this blog chronicling the movement in Facebook. I think the stock has been a really good trader except of course for the $38 buyers on the IPO. It feels like nobody wanted the stock at $19 either because all the initial investors were getting out. Some did for sure as was reported today but by and large there is a big group of holders not quite ready to hit the bricks yet. The lockup expiration dates have been the great buying opportunities of the year for this name. I guess the point is that when things are telegraphed this well in advance they are generally not what they seem?

Facebook Volatility is Still Cheap

Submitted by atg on Mon, 11/26/2012 - 5:25pm

I had to blink recently, because I thought FB was just a $20 stock. Nothing makes momentum traders happier than an upgrade of a whole bunch of technology stocks at once. FB, AAPL and YHOO all got the nod today from influential analysts and banks. We have had a small short put spread position in YHOO in our Strategy Letter for a while now, so I agree with the bullishness. One thing about the rally in FB is that it was accompanied by a rise in volatility. That I think is interesting.

Is the Market Liking FB?

Submitted by atg on Mon, 11/12/2012 - 5:21pm

As I mentioned in the Vol Report this morning, the market did not do much, and I did not expect it to. Between the budgetary haggling and the Greek financing issues, the market has plenty to keep itself on hold. The VIX did take a pretty good plunge down to around 16.94 to close near the lows of the day. Under any other circumstances, if the IEA said the USA was going to be oil independent in the next 20 years, a nice little rally might ensue. The tepid response means no relief rally until there is some, well, relief. Same brew of better economic news but simmering macro issues. At least from the VIX point of view, those macro issues took a sharp haircut in our sentiment.

Nesting in the Fiscal Cliff

Submitted by atg on Wed, 11/07/2012 - 6:27pm

The people have spoken and amazingly they don’t want to change a thing. I must have missed something in that the last 2-4 years were so good.

Wasn’t Facebook just hard to borrow?

Submitted by atg on Fri, 08/24/2012 - 4:31pm

I spent a few minutes today looking at some other internet blogs about options. Mark and I get links all the time, and I check them out when something looks good. I am happy to pass this one along- http://www.optionstradingiq.com/top-10-option-trading-blogs/. We made this guys top 10! It is nice when someone notices what you do and takes the time to write about it. Now that I have plugged myself, time to look at Facebook.

Is Facebook going Hard to Borrow?

Submitted by atg on Tue, 08/14/2012 - 5:11pm

With the swings in volatility this year, I never thought a 1.15 move would count as exciting. But moving from 13.75 up 1.15 counts as excitement on a day, when the SPX was down .15. Yes .15! I think there is some interesting VIX future action going on (premiums are pretty fat), but the lower VIX gets folks a bit scared. VIX got within .09 of the year lows going into the Italian Bond auction this week. That is pretty impressive for how much the mood has swung. I think there is some anticipation coming into the Italian debt offering later this week and will cover a trade for that tomorrow, since we have a day, at least, to go. FB gets the nod today.

FB