Unusual Options Activity: Meta Platforms (META)

Shares of social media giant Meta Platforms (META) have lost nearly 60 percent of their value in the past year. One trader sees a potential rebound in the months ahead.

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  • That’s based on the January 2023 $125 calls. With 116 days until expiration, 25,000 contracts traded compared to a prior open interest of 482, for a 52-fold surge in volume on the trade. The buyer of the calls paid $28.68 to make the bet.

    The stock recently traded closer to $140, making shares about $15 in-the-money already, accounting for a large percentage of the option’s cost. Shares still remain close to their 52-week low just under $141 per share.

    The company has struggled with costs as it has looked to rebrand away from social media platform Facebook, and add in an additional metaverse technology.

    Action to take: The company will likely still continue to be a winner in the social media space. And the recent drop has seen shares hit prices last seen during the Covid crash and the 2018 bear market lows.

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  • Buyers today can likely see some upside from here, although it will take time to play out.

    For traders, the options are a bit expensive, owing to them being in-the-money. Traders can likely nab mid-double-digit gains on the calls.

    But they could see a bigger percentage return in the months ahead on a share rebound with an out-of-the-money trade. The January $200 calls, for instance, are far cheaper at about $2.32 per contract.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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