Extreme profits from Facebook calls

Option activity was extreme in Facebook yesterday, and some traders made some fast money.

optionMONSTER's Heat Seeker tracking system showed heavy activity in the Weekly 28.50 calls that expire today. Those options went for $0.05 in the morning with the stock down around $27.70, but when FB started inching higher those calls ramped up to $0.45.

Long calls lock in the price where investors can buy shares, so they have the ability to generate big leverage when a stock rallies. But if the shares don't rise, yesterday's contracts will lose all of their value when the closing bell rings today. (See our Education section)

FB rose 2.39 percent to $28.24 yesterday and saw total option turnover of more 287,000 contracts, twice its daily average. That volume was enough to make the social-networking company the fourth most-active name in the entire option market.

Disclosure: I own FB shares.

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

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