Facebook Inc Options
Disclaimer: All forms of trading and/or investment carry risks. Such activities may not be suitable for everyone.
Note, today’s option is a monthly option, where the returns are between 3-9% per month.
Let’s take a look at today’s recommendation.
Options for day trading
Options Strategy – 6Mar14 Facebook Inc (FB) – a monthly options on this stock.
DIARY NOTE: FB were an original alert for a March expiry submitted on the 25th Feb. With time decay an issue and the price failing to meet entry criteria the trade was made inactive. Last session price action is positive for the stock and so we are happy to re-activate with an April expiry date.
Stock Options Strategy on Options Trading
Background : Facebook, Inc. (Facebook) is engaged in building products to create utility for users, developers, and advertisers. People use Facebook to stay connected with their friends and family, to discover what is going on in the world around them, and to share and express what matters to them to the people they care about. Developers can use the Facebook Platform to build applications and Websites that integrate with Facebook to reach its global network of users and to build personalized and social products. It offers advertisers a combination of reach, relevance, social context and engagement. In September 2013, Mail.Ru Group Limited sold its remaining interest in Facebook Inc. Effective September 25, 2013, Facebook Inc acquired Mobile Technologies, a developer of online applications. In October 2013, Facebook Inc acquired Onavo Inc. Effective January 8, 2014, Facebook Inc acquired Little Eye Software Labs Pvt Ltd. Effective January 13, 2014, Facebook Inc acquired Branch Media Inc.
Current Outlook : This is very much dependent on the Prevailing market conditions.
In both the Short and Medium Term, it has a GREEN STATUS, where this particular stock has less volatility, or signs may exhibit stability on this stock.
Technical Analysis : FB go from strength to strength from a price point of view. after some small profit taking a the end of last week, investors saw this as an opportunity to accumulate further on good buying volume to hit new highs once again. The price sits above all key moving averages
*Update – after a brief retracement from the original technical picture on the 25th Feb, FB have now broken over previous price peak on good trading volume, suggesting more upside potential is present.
Fundamental Analysis : Facebook continue to look strong fundamentally with further acquisitions seen as adding to their long term earnings growth. Company growth and operating margin is in a favorable position and although cashflow may not be as good as one would prefer it is not sufficiently concerning at this stage to merit a grading less than a B.
The Conditions for Entry : If this particular stock is able to trade above $71.57 above in last hour (3-4 pm). Max entry price is 72.50. Note: This is a reactivated trade with a longer expiry.
Estimated ROI: Based on a Current Price of $71.57, the potential Premium is around $3.50.
A Call Option Strike Price at $72.50 for Apr14, Yields 4.89%.
If this stock gets Exercised in 3rd week of Apr, the Return on the above info is about $4.43, giving a Yield of 6.19%.
In order to protect our downside risk, a Put Options with a Strike Price at $65.00 for Apr14, cost about $1.40.
Therefore, the Break Even point to buy this stock with the above options is around $69.47.
This gives us a Protection of around 90.82% on our downside risk.
Hence, with both Call and Put Options in place, if this stock gets Exercised in 3rd week of Apr14, the Return on the above info is about $3.03, giving a Yield of 4.23%.
Note, this is all conditional upon the criteria mentioned are met, and valid for the day itself only. This is the ROI of 3-9% per month I’ve mentioned in the previous post.
Let me know if you are interested to open an account and place a trade and you’ll get a reward by getting $100 in your account to start your trade.
Disclaimer: All forms of trading and/or investment carry risks. Such activities may not be suitable for everyone. This analysis is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to purchase or sell the product mentioned.
It does not have any regard to your specific investment objectives, financial situation and any of your particular needs.
Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting based on this information.
Investments are subject to investment risks.