Put Buyers Active in Facebook Again

On Tuesday, options contracts on Facebook

shares began trading, and investors were actively buying puts on the plunging IPO. Bloomberg reports that a total of 162,482 calls changed hands yesterday compared to 202,938 put contracts. The day's activity was the heaviest ever in options trading on a new IPO by a wide margin. The stock has been in free-fall since going public at $38.00 per share. On Wednesday, FB was initially trading higher, but has since given back its gains and was last trading down 0.45% to $28.71. On Tuesday, three-month contracts closest to FB's prevailing stock price were trading at an implied volatility of 63.50, which is higher than all but 7 stocks in the S&P 500. This suggests that options traders believe that the stock will remain volatile in the near-term. As a result, they are willing to pay higher prices for Facebook contracts. On Wednesday, options activity in the name has been heavy once again. Popular strikes have included the June $29.00 and $30.00 puts and the June $30.00 calls. Also active are the July $25.00 put options which have a large open interest of almost 11,000 contracts.