Short-term buyers pile into Facebook

optionMONSTER

Traders were charging into Facebook with short-term bets on Monday after investment-banking firm Needham raised its price target for the social-networking stock.

optionMONSTER's Heat Seeker system showed bullish activity in several strikes that expire at the end of this week. Calls traded in a strong buying pattern at the December 25.50, 26.50, 27, 27.50, and 28.50 strikes, all well above their respective open interests and therefore new positioning.  

Long calls lock in the price where a stock can be bought and can provide significant leverage if the shares rally. Monday's trades are looking for Facebook to hold current levels or rise modestly, depending on the strike and the price of the options purchased. (See our Education section)

FB gained 2.55 percent on Monday to close at $26.93 after Needham raised its price target to $33 from $25 that morning, citing estimates for mobile-revenue growth. Shares had climbed sharply since hitting support around $19 in mid-November but have failed to break resistance at the $28 level.

Total option volume in the name exceeded 88,000 contracts, well above its full-session average despite the truncated holiday session.

(A version of this post appeared on InsideOptions Pro on Monday.)

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