Are you looking to start social media investing? If so, you might want to keep an eye on the market today, as social network giant Facebook (NASDAQ:$FB) will report its second quarter earnings after the market closes. And, despite seeing their shares increase almost 44% this year, there are a few traders that appear to be pumping the brakes on the stock ahead of the earnings report.
“Over the past five days, Facebook has been the second-most-active single stock option that’s being traded [in the options market],” said Mike Khouw of Optimize Advisors.
Options activity in Facebook may have been bullish in the last week, but the majority of the opening activity on July 25 was bearish, according to Khouw.
Perhaps the most important trades were the purchases of over 5,500 of the 157.5-strike puts for $2.30 per options contract. These are thought to be bearish bets that Facebook will fall below $155.20 by August expiration. This is more than 6% lower from Wednesday’s trading price.
According to Dan Nathan of RiskReversal.com, Facebook “has rallied 10% in the last couple weeks,” as the bulls have piled into the name. “I think you could have a similar sort of move that Google had [on earnings]. I think it’s a digestion of that [upside] move.”
Following the company’s second quarter earnings report, Facebook is expected to move nearly 5% in either direction. This prediction is in line with the average move over the past eight quarters.
Analysts were surveyed by FactSet, and the results showed that most analysts are predicting that Facebook will report earnings of $1.12 per share on $9.2 billion in revenue.
During midday Wednesday, Facebook shares were trading at the $165.20 range.
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