Shares of Meta jumped 12% Monday. Options volume exploded. The reason? Investors decided this is their new favorite consumer AI play. Not their favorite AI play. Their new favorite consumer AI play. Which means they had an old favorite consumer AI play. Which means they've been cycling through AI plays like a divorced dad cycles through Netflix profiles.
Meta builds chatbots that hallucinate and VR headsets nobody wears. The stock went up anyway. Options traders saw the word AI in a headline and started clicking buttons. This is what passes for due diligence now. Reading the first three words of a Bloomberg push notification and buying calls.
The social media giant has been a social media giant for over a decade. But investors just discovered it. They discovered it the way you discover your keys in your pocket after tearing apart your entire house. It was always there. You were always stupid.
Volume surged because retail traders think options are lottery tickets with better branding. They see a 12% move and assume there's another 12% coming tomorrow. There isn't. There never is. But they'll buy the calls anyway because a guy on Twitter with a cartoon profile picture posted a rocket emoji next to the ticker.
Meta spent $46 billion on the metaverse. Nobody cared. Meta slapped AI on a chatbot. Stock rips. This tells you everything about how markets price innovation. They don't price the product. They price the buzzword. If Zuckerberg announced Meta was pivoting to blockchain quantum gaming nodes, the stock would hit $700 by Wednesday.
Options volume is surging because traders discovered their new favorite thing to lose money on.
Photo by Julio Lopez on Unsplash
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