A Look Behind Facebook’s Surging Options Volume


“No news is good news.” You can say that again about Facebook (FB).

The one-time technology darling has been slammed by one negative headline after another since the start of last week. Most traders know the story… user data was leaked to Cambridge Analytica. CEO Mark Zuckerberg admits “mistakes were made.” He begs forgiveness in old-fashioned newspaper ads. Polls show a loss of public trust. Lawmakers and regulators on both sides of the Atlantic circle. Analysts nibble away at their price targets.

What you might not know is how much options activity has spiked in the name. Consider these statistics based on TradeStation’s own proprietary real-time customer data:

  • FB was the 11th busiest underlier in the first half of this month, before the Cambridge Analytica news broke. It trailed other Nasdaq heavyweights biggies like Netflix (NFLX), Apple (AAPL) and Amazon.com (AMZN).
  • In the seven sessions after the news broke, FB shot to No. 2 on the list, trailing only the ever-active SPDR S&P 500 fund (SPY).

Looking at broader data across the entire market, the House of Zuckerberg has averaged 664,215 options contracts per session since the words “Cambridge Analytica” echoed down Silicon Valley. That’s roughly double the amount in AAPL during the same time, and twice FB’s typical order flow in the last month.

One final note: FB shares are down 18 percent since March 16. That makes it the worst performing member of the Nasdaq-100. It’s also the second-biggest drop in the S&P 500, behind AbbVie (ABBV).

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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.