Earnings upcoming: Get options exposureTHE BACKDROP ON FB: A STOCK WE LIKE TO OWN
The stock is up some 7.5% since we recommended to buy at $118.69. We are currently in the middle of the up-channel and the stock looks overbought and ready for a consolidation, probably until earnings are out (expected Feb 1). Owners should hold on to positions (see earlier idea "Three times lucky?") Non-holders of the stock and those who would like to increase exposure should do it synthetically through one of the credit-strategies highlighted below.
CREDIT OPTIONS STRATEGIES TO PLAY THE EARNINGS
With a "strong buy" rating from the consensus of analysts and an average target of $153.17/Share (+20%), expectations are high. Meanwhile, there is a significant resistance above our head at the historical high of $133.50 (+4.5%), and high expected volatility around earnings (+5.3%). In this context, Sell the 120 put for a chance to go long at a lower price if the stock falters, and buy a call just above the historical high if the stock breaks out. And get paid to wait.
Sell FB 17Feb17 $120 PUT = $1.61 (Ind.)
Buy FB 17Feb17 $135 CALL = -$1.41 (Ind.)
Total = +$0.20 (Ind.)
Sell FB 17Feb17 $120 PUT = $1.61 (Ind.)
Buy FB 10Feb17 $135 CALL = -$1.26 (Ind.)
Total = +$0.35
Sell FB 24Feb17 $120 PUT = $1.71 (Ind.)
Buy FB 3Feb17 $135 CALL = -$1.05 (Ind.)
Total = +$0.66
