Facebook Option Traders Bet Huge That Stock Will Trade Higher Before August: See The Trades

Facebook, Inc. FB dropped to support around the $300 level on Wednesday amid overall market weakness.

The social media company has been under pressure from a number of governments around the world and on Tuesday, German watchdog Johannes Caspar implemented a three-month ban on Facebook’s WhatsApp platform from collecting user data.

On Wednesday, within three minutes of time shortly after 11 a.m. EST, nine separate Facebook calls were purchased at a cost of more than $5.16 million. The trader, or traders, who purchased the options chose the same strike price of $315 and the same expiry date of Aug. 20 for each order.

This indicates that, despite Facebook’s retracement on Wednesday, the buyers of these options believe Facebook’s stock is headed higher over the next few months.

The Facebook Options Trades: Below is a look at some of the notable options alerts, courtesy of Benzinga Pro:

• At 11:10 a.m. Wednesday, a trader executed a call sweep, above the ask, of 753 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $1.104 million bullish bet for which the trader paid $14.67 per option contract.
• At 11:11 a.m., a trader executed a call sweep, near the ask, of 391 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $582,981 bullish bet for which the trader paid $14.91 per option contract.
• At 11:11 a.m., a trader executed a call sweep, near the ask, of 256 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $382,720 bullish bet for which the trader paid $14.95 per option contract.
• At 11:11 a.m., a trader executed a call sweep, near the ask, of 204 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $304,980 bullish bet for which the trader paid $14.91 per option contract.
• At 11:11 a.m., a trader executed a call sweep, near the ask, of 459 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $690,000 bullish bet for which the trader paid $15.04 per option contract.
• At 11:11 a.m., a trader executed a call sweep, near the ask, of 262 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $393,786 bullish bet for which the trader paid $15.03 per option contract.
• At 11:11 a.m., a trader executed a call sweep, near the ask, of 272 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $411,536 bullish bet for which the trader paid $15.13 per option contract.
• At 11:12 a.m., a trader executed a call sweep, near the ask, of 324 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $495,396 bullish bet for which the trader paid $15.29 per option contract.
• At 11:13 a.m., a trader executed a call sweep, near the ask, of 520 Facebook options with a $315 strike price expiring on Aug. 20. The trade represented a $797,160 bullish bet for which the trader paid $15.33 per option contract.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays the market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

FB Price Action: Shares of Facebook were trading down 1.06% to $303.28 Wednesday afternoon at publication.

(Photo: Alex Haney via Unsplash)