Somebody Thinks Their Facebook Shares Are Going To Take A Hit

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So he or she is buying some protection: $8.3 million worth.

The player paid about $8.3 million for a “massive” chunk of put options, “one of the largest FB trades this year,” according to Henry Schwartz, president of Trade Alert LLC, an options data provider….

Monday’s trader purchased a fresh slug of 30,000 put options that grant the right to Facebook’s shares at $45 by January 2015. With Facebook’s stock at just north of $60, the options trade is most profitable should the stock tumble 25% over the next eight months….

Brian Overby, senior options analyst at brokerage TradeKing, called the trade “bullish but nervous,” since the options trader appears to be hedging the stock position but still holding on to the shares….

“If this person owned Facebook stock since inception, it’s nearly doubled,” he said. “You can kind of understand [a protective options trade] with the run that Facebook has had and the recent volatility,” he said.

Trader Sets Up ‘Massive’ Options Bet Against Facebook [WSJ MoneyBeat blog]

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