Meta Platforms, the $1.7 trillion market-cap company helmed by Mark Zuckerberg, appears to be staging a significant recovery, largely attributed to its aggressive strides in artificial intelligence. After nearly a year of subdued stock performance, the tech giant's shares soared more than 6% on Friday, reaching their highest valuation since April.
This renewed optimism follows recent announcements detailing Meta's strategy to commercialize its substantial AI computing infrastructure. Further bolstering confidence, the company unveiled Muse Spark 1.1 on Thursday, a new AI coding tool designed to compete with offerings from industry leaders like Anthropic and OpenAI. Despite these recent gains, Meta's shares remain flat for the year, contrasting with the tech-heavy Nasdaq-100, which has climbed 18%.
The positive sentiment was palpable in the options market on Friday, where trading volume surged to over three times the 30-day average. A remarkable 78% of the stock's $1.8 billion in options premium was directed towards call options, indicating a strong bullish bias among traders, according to data from Cboe LiveVol and SpotGamma. While some call selling likely occurred, the sheer volume of call purchases significantly outpaced put buying, with eight of the top ten most active contracts being calls by midday.
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Many of these bullish bets were placed on contracts expiring later the same Friday, signaling an expectation for immediate upward momentum. The most popular of these was the $675 strike call, priced at approximately $3 per contract, requiring Meta to gain an additional 2% by the closing bell to break even.
For those looking slightly further out, the July 17 700-strike call emerged as the most actively traded contract beyond Friday's expiry, needing a 6% rally for profitability.
Despite the prevailing bullish sentiment in short-term options, not all traders were convinced of a dramatic price swing. A notable trade involved the selling of $29 million worth of both puts and calls at the $670 strike, a strategic play suggesting a belief that Meta's stock would consolidate around its current level for the next two months, effectively betting against significant movement in either direction.
