Trading Facebook Options 5.25.2012

Other factors is that FB trades 193 million shares in a day and the only stock that trades close to that is BAC which trades 250 million and BAC traded about 100,000 options yesterday. Another question about volatility, where will it be? All the social media stocks are ranged between 65-85, with LNKD being a very similar to FB and that has a volatility of 77.

Who will be the main market maker, the easy answer is Citadel.

What else is important to know, earnings is schedules for July 25th, after July expiration so volatility in August will always stay very high. The last couple of days FB has had a tight range in the stock and since implied volatility is based on historical volatility, the more it trades in a smaller intraday range, the lower the implied volatility should trade. Also, since there are so many funds and banks that own this stock, they will want to protect their position, and they will be doing this by buying out of the money Puts and Selling out of the money Calls, making the Skew even more expensive.

One last thing to ponder, there will be Dollar Strikes and right off the bat there will not be weekly options. Also, if there are more Puts being Bought and Calls being sold, then traders will Sell MORE stock to hedge their position forcing the stock to go lower and the hard-to-borrow to increase