Amid Nasdaq Rout, Big Facebook Options Play Catches Trader Eyes
(Bloomberg) -- While the stock market was having its worst day since February, someone was getting fancy with options on one of the rout’s higher profile casualties: Facebook Inc.
A trader Wednesday paid $26 million for 39,000 call spread contracts comprised of March 2022 calls with a $400.01 strike price and March 2022 calls with a $480.01 strike. Facebook has tumbled nearly 7% in May to $302.55 as inflation fears have battered tech shares.
The exact intent of the position, which bears a slight resemblance to some of the so-called Nasdaq whale trades that made headlines last summer, is open to interpretation. One analyst, Chris Murphy of Susquehanna, sees it as a strategy to amplify the payoff of a rally in the social media giant, for someone who may or may not already own the stock.
“I would describe it as adding leverage to a more dramatic upside move,” said Murphy, a derivatives strategist. “There is always the chance it traded against stock to have less impact and they will work out of the stock on the back end.”
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