REUTERS – After a disappointing initial public offering and subsequent 20 percent fall, investors piled into Facebook (FB.O) options on their first day of trading Tuesday, making it the busiest debut ever in the options market.
Facebook options have become a tempting target as more investors bet the stock – currently near $30 a share, down from an IPO price of $38 – will continue to decline.
“Current volume implies Facebook may hit 400,000 contracts today, making it the best first-day listing in listed options history,” said Henry Schwartz, president of Trade Alert.
Options volume on Facebook exceeded 100,000 contracts in less than two hours of trading, with 62,000 puts and 48,000 calls for a put-to-call ratio of 1.29, according to data by options analytics firm Trade Alert.
The most active options were the June $30 put strike, with more than 10,900 contracts on the tape at an average price of $1.45 per contract.
The largest trade was a bearish 3,050-lot put spread on the Nasdaq OMX PHLX options venue just after 10:00 a.m. in which a customer paid $2.95 for the July $32-$25 put spread, said Schwartz.
Facebook’s at-the-money option implied volatility opened near 66 percent and is currently about 60 percent.
NYSE Amex Options, owned by exchange operator NYSE Euronext (NYX.N), is the designated primary market for Facebook options.
Initial strike prices below and above the share price are from $16 to $49, in $1 increments, with standard monthly expirations in June, July, September, December, January and January 2014. Short-term weekly options contracts expiring June 8 will be added on Thursday.
(Reporting by Angela Moon and Doris Frankel; editing by John Wallace)