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Facebook Calls Remain Popular Amid Snap Accusations
By: Schaeffer's Investment Research | September 23, 2019

• Snap has accused Facebook of undermining business practices, according to reports
• Call traders are betting on more upside for FB

Facebook Inc (NASDAQ:FB) was slammed earlier, after a Wall Street Journal report (subscription required) said rival Snap (SNAP) came out with a list of ways in which the social media giant attempted to sabotage it. According to those familiar with the matter, Snap's dossier, titled Project Voldemort, highlights undermining business practices committed by Facebook, including discouraging popular accounts from mentioning Snap on their pages. This new report comes amid an antitrust probe from the Federal Trade Commission (FTC) into several major tech names, including Facebook.

Options traders are still showing a preference for calls over puts today, echoing a recent trend. In fact, Facebook is on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume during the past 10 days, with names highlighted in yellow new to the list. In the last two weeks, roughly 255,000 weekly calls have changed hands on FB, compared to about 145,500 weekly puts.



Looking at data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a notable portion of this activity was of the buy-to-open kind. The FAANG stock's 10-day call/put volume ratio of 2.63 ranks in the 90th annual percentile, showing calls have been bought to open relative to puts at a much quicker-than-usual clip.

Drilling down, the weekly 9/27 195-strike call saw a large amount of open interest added in the last two weeks. Data from Trade Alert suggests that a large number of these positions were bought to open, which means traders are expecting FB to break north of the $195 region by the time these contracts expire at the close this Friday, Sept. 27.

Looking more broadly, the shares of Facebook have cooled since hitting a one-year high atop the $208 level in late July. The equity managed a bounce off familiar support at its 160-day moving average in late August, however, and still boasts a 42% year-to-date gain. Overhead sits the $190 region -- home to the stock's 50-day trendline -- with the shares running up to that level earlier today before reversing course. The stock is down 1.6% at $186.88, at last check.

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