TP Says...
Friday, May 22, 2020
FB is up nearly 13%, the equivalent of 2.11 standard devs, in the past six days as the market embraces its “Facebook Shop” feature that could boost earnings and news that many employees would be working from home permanently, which will reduce overhead.  All that excitement for a mind-numbing platform that my teenage kids and their friends seem to think is the entertainment equivalent of black-and-white TV.  Not that they’ve ever seen a black-and-white TV, but you get the point.  The question is, as always, is how much more upside is there for FB?  FB’s OTM puts are trading at a premium to equidistant OTM calls, suggesting that the risk is to the downside.  Maybe it is, or maybe it isn’t.  But there’s still enough premium on the call side to make short option strategies interesting.  If you think that all the good news is already baked into FB’s price and that its rally might slow down and even reverse in the next few weeks, you might consider a bearish strategy in FB.  If you are bearish, the short call vertical that’s short the 240 call and long the 242.5 call in the June weekly expiration with 35 DTE is a bearish strategy that collects a credit 1/3 the width of its strikes, has a 74% prob of making 50% of its max profit before expiry and that generates $.54 of positive daily theta. 
Check out the live show at 7AM CT!
Check out luckbox Magazine
Share Share
Tweet Tweet
Forward to a Friend Forward to a Friend
Copyright © 2020 tastytrade, All rights reserved.

unsubscribe from this list    update subscription preferences 

tastytrade content is provided solely by tastytrade, Inc. and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Multi-leg option strategies incur higher transaction costs as they involve multiple commission charges. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.