Options Traders See Upside For Facebook's Stock

Facebook Inc FB on Tuesday announced it was planning to monetize its online high school and minor league sports games using a pay-per-view model. The news was followed on Wednesday with the announcement of a new Facebook app feature called “Live Shopping Fridays” where Facebook’s users will be able to shop directly from their favorite brands.

Both announcements will generate increased revenue for the social media company and shares of Facebook are trading up about 4% over the past two trading days.

A number of Facebook options traders think the revenue will boost the company’s value and bet over $3.24 million Facebook’s stock is headed higher.

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

• At 9:36 a.m., Thursday a trader executed a call sweep, near the ask, of 2246 Facebook options with a strike price of $320 expiring on May 28. The trade represented a $938,828 bullish bet for which the trader paid $4.18 per option contract.
• At 9:36 a.m., a trader executed a call sweep, near the ask, of 405 Facebook options with a strike price of $320 expiring on May 28. The trade represented a $177,795 bullish bet for which the trader paid $4.39 per option contract.
• At 9:37 a.m., a trader executed a call sweep, near the ask, of 401 Facebook options with a strike price of $320 expiring on May 28. The trade represented a $172,430 bullish bet for which the trader paid $4.30 per option contract.
• At 10:42 a.m., a trader executed a call sweep, at the ask, of 250 Facebook options with a strike price of $260 expiring on June 18. The trade represented a $1.45 million bullish bet for which the trader paid $58.33 per option contract.
• At 11:21 a.m., a trader executed a call sweep, near the ask, of 696 Facebook options with a strike price of $340 expiring on July 16. The trade represented a $382,800 bullish bet for which the trader paid $5.50 per option contract.
• At 11:25 a.m., a trader executed a call sweep, near the ask, of 200 Facebook options with a strike price of $325 expiring on June 18. The trade represented a $128,000 bullish bet for which the trader paid $6.40 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 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 up 1.3% to $317.74 at publication time.