Facebook shares fall to $28.84 on first day of options trading

Facebook shares fell more than 9 percent today, closing at $28.84 on the first day of options trading, which allows investors to bet on the future of the stock with less money at risk.

Today marks the first time the company’s shares dropped below $30 after its initial public offering earlier this month, which priced shares at $38. Facebook now has a market cap of about $79 billion, down from the $104 billion IPO valuation. The broader market was up today with the Nasdaq, Dow and S&P all gaining over 1 percent.

Facebook’s stock had a low of $28.65 today as the company debuted in the public options market. An option is a contract that gives investors the right to buy or sell shares at a specific price on or before a certain date. It does not give investors any ownership of a company. Options can be used to bet on the direction of a stock’s price through “calls” and “puts.” When investors buy a call option, they can purchase a stock at a set price any time before the option expires. When investors buy a put option, they can sell a stock at the strike price any time before the expiration date.

According to Bloomberg, the volume for puts exceeded calls by 1.2-to-1, indicating that many investors believe Facebook’s share price will continue to decline over the next month. The outlet says June $30 puts were the most common, followed by June $34 calls and June $32 calls.

The Wall Street Journal suggested that options trading contributed to Facebook shares’ overall decline today. Other factors could include the lawsuits and controversy that have resulted from the social network’s IPO, as well as rumors that Facebook could be building a phone or buying a browser.

Facebook Marketing

Mediabistro Event

Facebook Marketing

Starting January 13, work with the group marketing manager of social media at Microsoft/BingAds to grow your business on Facebook! In this course, you’ll learn how to set up your company page, understand Facebook best practices, and execute a monthly content strategy. Register now!

 

Leave a Reply

Get the latest news in your inbox
interested in advertising with inside facebook?

Social Media Jobs
of the Day

Business Technology Editor

McMurry/TMG
Washington, DC

Assistant Editor

8 Inc.
New York, NY

Editorial Manager

Air Age Media
Wilton, CT

Featured Company

Join leading companies like this one and recruit from the nation's top media job seekers on the Mediabistro Job Board. Every job post comes with our satisfaction guarantee. Learn More
 

Our Sponsors

Mediabistro A division of Prometheus Global Media home | site map | advertising/sponsorships | careers | contact us | help courses | browse jobs | freelancers | content | member benefits | reprints & permissions terms of use | privacy policy Copyright © 2014 Mediabistro Inc. call (212) 389-2000 or email us