How to crash Facebook. You know somebody's thinking about doing it.

W

wilburbear

Facebook options start trading May 29 at the CBOE.

Someone should cause a print at 37.99 on an away market, or when there are "fast market" conditions that allow print-throughs, or utilize any useful information from the AAPL-BATS print-throughs.

Any print under 38 will signal a breakdown in the artificial price support syndicate and cause a cascade of selling.

Load up on SPX puts beforehand because the public is involved with Facebook like nothing else, and wider market effects will follow.

Loading up on Facebook puts would be even better if the syndicate can just hold out until May 29.
 
It was pretty weak at the close Friday. Barely held onto 38.

What makes you think it will stay above 38 even on Monday?
 
Facebook like AAPL is a cultural phenomenon, no matter how much you hate it, you have it. That tells you all you need to know about shorting it.
 
Quote from AAAintheBeltway:

Why not just short MS? Won't they be holding the bag?
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My first impression from news reports was that Morgan Stanley held more than 2 billion dollars in Facebook at the end of Friday.

Regulatory filings show MS holding 6.16 billion dollars in Facebook at the end of Friday.

I would still expect bids in the millions at 38 on Monday, but you can see the issue if you consider yourself in this position at a much smaller size. You can prop the market at 38, but do you want to hold 9 billion dollars of Facebook? How about 13 billion dollars? You're playing chicken with a cliff.

MS is not the strongest firm on the street. They increased both the price and the size of the offering in the final weeks, and took a smaller underwriting fee than usual. It smells like they tried to wring too much out of a vulnerable position, possibly to say they took the leadership role in Facebook .

Morgan Stanley has the biggest obligation to purchase Facebook and the biggest position in its shares. The position of the second biggest underwriter in Facebook is less than half of MS's position.

So yes, if you see MS start to sag, FB may then also be vulnerable.
 
Quote from wilburbear:

My first impression from news reports was that Morgan Stanley held more than 2 billion dollars in Facebook at the end of Friday.

Regulatory filings show MS holding 6.16 billion dollars in Facebook at the end of Friday.

I would still expect bids in the millions at 38 on Monday, but you can see the issue if you consider yourself in this position at a much smaller size. You can prop the market at 38, but do you want to hold 9 billion dollars of Facebook? How about 13 billion dollars? You're playing chicken with a cliff.

MS is not the strongest firm on the street. They increased both the price and the size of the offering in the final weeks, and took a smaller underwriting fee than usual. It smells like they tried to wring too much out of a vulnerable position, possibly to say they took the leadership role in Facebook .

Morgan Stanley has the biggest obligation to purchase Facebook and the biggest position in its shares. The position of the second biggest underwriter in Facebook is less than half of MS's position.

So yes, if you see MS start to sag, FB may then also be vulnerable.
More...


Public participation is massive.

If you lose money on Facebook, buying at $42 soon after the open (as I did), do you really want to log on to their webpage and be greeted by that name again in bold, blue letters?
 
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