Facebook, Inc. (FB), is engaged in building products to create utility for users, developers, and advertisers. People use Facebook to stay connected with their friends and family, to discover what is going on in the world around them, and to share and express what matters to them to the people they care about. FB is currently trading around $77.85 in a 52 week range of $42.43 – 78.17. The company’s stock has been outperforming the market this year with shares increasing 42.43% year to date.
Today we got a great signal of FB breaking the Ichimoku Cloud to the Upside, on the first 5-minute bar of the trading day. This is our ideal set-up, as the stock breaks the cloud to the upside and closes on the highs. We would have a stop under the low of the day: $76.40. A less aggressive trader might set a stop in the Ichimoku Cloud, at around the $76.80 level. Our head trader took profits at the the targets listed below. These types of trades are short-term day trades, and appropriate stop loss and target prices are critical to successfully managing the position. Facebook soared higher today, and the stock is trading near its 52-week high towards the end of today’s session.
The Trade: Buying FB at $77.13
STOP Loss: $76.40
Target #1: 50% of Stop Loss
Target #2: 100% of Stop Loss
Target #3: 150 of Stop Loss
Target #4: 200% of Stop Loss
We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.
Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long:http://bit.ly/11f0L9u.
Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.