Najarian Sees Massive Put Buying In Facebook—Here's How He's Playing The Stock

The sell-off in Facebook Inc FB stock is accelerating Wednesday as shares tumble to new two-month lows.

What Happened: Facebook began trading lower following a recent report by The Wall Street Journal suggesting its Instagram platform is negatively impacting the mental health of some of its users.

Facebook also announced Wednesday via blog post it underreported ad performance on Apple Inc's AAPL iPhones. The company estimated it underreported web conversions on Apple’s iOS by approximately 15% during the third quarter.

See Also: Facebook Oversight Board Probes XCheck, Whitelisting

Najarian's Take: Market Rebellion co-founder Jon Najarian sold half of his Facebook stock and bought puts against his remaining position. He noted he saw a huge spike in put options being bought in Facebook today.

"People just came flooding in—and by people I mean probably a whole lot of institutions—because this is really big put buying," Najarian said Wednesday on CNBC's "Fast Money Halftime Report."

Put buyers are buying up options between the $350 strike and the $330 strike, he said.

Over the last month about 85,000 puts were bought for Facebook per day. "We already surpassed that in the first hour today," Najarian said.

Najarian cut half of his Facebook stock position and followed the notable option activity by buying puts against the other half of his position.

Facebook expects the privacy changes Apple made to its iOS operating system will continue to have a negative impact. This "seems like something that will get analysts to downgrade or at least take their targets down," Najarian said.

The material impact Apple's changes will have on Facebook's business is one of the main reasons he is decreasing his long exposure.

Najarian noted he wants to avoid a situation in which Facebook falls to $300 per share or lower and he ends up chasing.

FB Price Action: Facebook has traded as high as $384.33 and as low as $244.13 over a 52-week period.

The stock was down 4.29% at $342.08 at time of publication.

Photo: Thomas Ulrich from Pixabay.