Printed from http://www.electronista.com

Option traders forecast further Facebook stock slide

updated 09:15 pm EDT, Tue May 29, 2012

Facebook options trade heavily as investors bet on decline

Tuesday marked the first day that investors were able to trade options on Facebook's recently opened stock, and, if initial indications are to be believed, the market believes Facebook's stock price will fall even further than it has since its opening. CNN reports that Facebook options saw heavy activity today, more than half of which were bets that the stock's price would drop.

Option trading allows investors to buy or sell a stock at a specific price, effectively letting them wager on whether a stock will increase or decrease in value. In the first day of option trading for shares of the social network, 365,000 contracts changed hands. Fifty-six percent of those were "put" options--bets that the stock would decline.

Options trading activity for Facebook was second only to Apple today. Since their debut, shares in the social network have declined sharply, losing 10 percent Tuesday to close at $28.84--roughly 26 percent below its debut opening price. The decline in share value is seen by some as indicative of a lack of confidence on the part of investors in Facebook's ability to adequately monetize its massive user base. Facebook relies on advertising for a considerable portion of its revenue, but has been struggling to attract advertisers in the wake of other big firms abandoning ad efforts on the site.



By Electronista Staff
Post tools:

TAGS :

toggle

Comments

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

Sponsor

Recent Reviews

Tylt Energi 2K Travel Charger

Backup batteries and device chargers are objects that many users take for granted. They often only one-dimensional in functionality, r ...

ActvContent Sync Smartband

Smartbands of all sorts are hitting the market. Some build on the buzz around fitness trackers, while others offer simpler features fo ...

RocketStor 6324L Thunderbolt 2 eSATA bridge

Like it or not, the shift to Thunderbolt is underway. The connection is extremely flexible, allowing for video and data to co-habitate ...

Sponsor

toggle

Most Commented

 
toggle

Popular News