Unusual Options Activity: Facebook (FB)

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  • Shares of social media behemoth Facebook (FB) have rallied modestly in the past few days as the backlash against social media firms has started to recede. At least one trader sees shares heading fundamentally higher.

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  • That’s based on the June 2022 $320 calls. Over 9,400 contracts traded against a prior open interest of 193, for a 49-fold rise in volume. The option expires in 511 days. Shares trade near $272, and would need to rally about 17 percent for this trade to move in-the-money.

    The buyer paid about $32.80 for the calls.

    Facebook is an advertising giant, and has managed to grow both revenue and earnings by over 20 percent in the past year. While some political blowback may dampen first-quarter earnings this year, chances are the company will still find ways to protect its revenue sources and continue to generate its 32 percent profit margin.

    Action to take: These call options are a great example of a fat-pitch trade. They have ample time to play out, and a small move higher in a tech stock could be leveraged into a large win. Traders should consider the option, and look to take profits on a double (triple-digit returns) or better. Shares are still well off their highs from last year, so there’s room for the stock to run.

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