Options Traders Bet On Record Highs For Facebook, Microsoft Stocks – Schaeffers Research (press release)

This post was originally published on this site

Facebook Inc (NASDAQ:FB) was in the news recently, after inking an exclusive streaming partnership with Major League Baseball last week. Also making headlines is Microsoft Corporation (NASDAQ:MSFT), in focus after Deutsche Bank raised its price target to $120 from $115. Meanwhile, options volume for both big-cap tech stocks has been hot in recent weeks.

Both FB and MSFT stocks landed on Schaeffer’s Senior Quantitative Analyst Rocky White’s list of the 20 stocks that saw the heaviest options volume over the past 10 days. Names in yellow are new to the list since the last time the study was run. As you can see, call volume nearly doubles put volume for both Facebook and Microsoft in recent weeks.

Options Bulls Keep Piling On FB Stock

Looking at Facebook, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) confirms a substantial call bias, with long calls nearly doubling puts in the past 10 days. The May 215 call saw the largest increase in open interest during this time frame, but it was the weekly 3/29 200-strike call that saw heavy buy-to-open action last week. As such, many traders have been betting on FB shares topping the $200 level before the end of March.

At last check, the FAANG name was trading near breakeven at $185.28. Facebook stock has added 33% year-over-year, but recently pulled back last month with the broad market sell-off. The shares bounced from their supportive 160-day moving average, however, and could be poised to make a run at their Feb. 1 record high of $195.32.

Microsoft Stock Options Are Attractively Priced

As for Microsoft, options traders are also call-heavy, and have been for some time. This is evidenced by the stock’s 50-day call/put volume ratio of 2.85 at the International ISE, CBOE, and PHLX, which ranks 3 percentage points from a 52-week high. 

In the last two weeks in particular the April 100 call and the June 100 call have seen notable attention. Data from the major options exchanges indicates mostly buy-to-open activity at the April strike, while the June strike shows a mixture of buy-to-open and sell-to-open activity.

The good news for premium buyers is that MSFT’s Schaeffer’s Volatility Index (SVI) of 19% ranks in the 26th annual percentile. In other words, relatively low volatility expectations are being priced into short-term contracts. 

Microsoft stock touched a fresh record high of $96.91 earlier and was last seen up 0.2% at $96.74. Overall, the blue chip has rallied 49% over the past year.

Leave a Reply