Facebook Options Off the Charts

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- The option flow in Facebook ( FB) has been relentless, and it was extreme again Monday.

In the first hour of trading alone, calls outpaced puts by 135,000 to 55,000, with the bulk of activity focused on the 50, 51, 52.50, and 55 strikes in various expirations. There were even some outliers that make you shake your head at the kind of upside levels that are being targeted.

For example, traders were snapping up November 95 calls in decent size for 7 cents, according to OptionMonster's tracking systems. This doesn't necessarily mean that the buyers expect an immediate spike to $95, as they can always sell the options before expiration if premium rise before then, but it certainly does stand out.

The calls lock in the price where shares can be purchased, giving them cheap leverage to upside in the social-media company. Volumes have been building in the name, which more than 500,000 contracts change hands in total Monday. Not only was that twice its normal amount, but it also dwarfed Apple's 260,000 contracts.

Facebook's stock reversed early gains and ended the session down 1.97% at $50.23, but not before making another all-time high of $51.60.

Najarian owns FB shares and calls

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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