Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Could It Be That Facebook Inc (FB) Is Not Doing Quite Well?

Facebook Inc (NASDAQ:FB) rose some 5.5% in the course of the last 5 days, showing life symptoms through kicks in the stock price. It’s close to 77$ at the moment, but some people expect the values to diminish throughout this week. CNBC depicted a massive trend of bearish bets on Facebook Inc (NASDAQ:FB) options, which traded only 3 quarters of the average daily volume.

Biggest IPOs in US History

“But, right out of the gate, this morning, when the stock was $76 – $75 a trader bought 6,500 of the October 24th weekly $75 put, paying $.80 for those. Those break even at $74.20, down at about 3.5%, by Friday’s expiration. Which is curious about this trade is that there is no event this week other than just the market trading here,” said Dan Nathan.

Facebook Inc (NASDAQ:FB) will reveal financial data in a week, on October 28, and the implied volatility of future contracts has not reached the levels prior to previous earnings reports. Thus, the above transaction could stand for a cheap form of protection against an unpleasant surprise, suggested Mr. Nathan. At a PE ratio of 83.58 and growth of almost 41% year to date, the tech monster has outperformed most of its peers showing no sign of weakness. However, being heavily long onto a stock practically obligates one to take security measures. The problem is that there were too many similar trades with Facebook Inc (NASDAQ:FB) options, but at a smaller scale.

“This is kind of either near-term bearish bet or maybe protection against the long position, but 28,000 of these options traded today and a lot of them bought,” said Dan Nathan

This does not mean that there should be any reason to panic, but it’s a sign that you cannot be too sure about something. Probably, a truly long term holder wouldn’t have bothered that much to hedge its Facebook Inc (NASDAQ:FB) positions as the company is expected to perform brilliantly, yet we cannot make any certain inference based solely on intuition.

Disclosure: none
Warren Buffett and BillionairesFree Report: Warren Buffett and 12 Billionaires Are Crazy About These 7 Stocks

Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.