Facebook’s stock has been hammered since the company’s IPO on May 18, including a hard hit when options trading began earlier this week. Like early buyers in Facebook Inc.
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common stock, many options traders are also likely smarting.
Andrew Wilkinson, chief economic strategist at Miller Tabak Co., points out that about 95% of all of Facebook’s open call option positions — or, the right to buy the stock — are out of the money and if they expired today, would be worthless, he estimates. The majority of strike prices for call positions remain at $30 a share, with 58% of those set to expire in June. Facebook shares closed Thursday at $29.60.
The bearish take on Facebook comes from put options, or the right to sell a stock, at a strike price of $20 a share. Wilkinson said almost 7% of the put options are at that level.
Since going public at $38 a share, Facebook’s stock is down 23%. Read latest on Facebook in tech stocks.
– Rex Crum
Follow The Tell blog on Twitter @thetellblog
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