FB reports earnings tonight, and we have some bear call spreads that are a little too risky to hold into earnings.
We are going to roll them out in time and up in price to give us a buffer.
The current trade setup:
Expected Price: 160
Sell to Open FB Aug 170/175 Call Spread
Tier 1: Open at 0.73, Close at 0.23
Tier 2: Open at 1.03, Close at 0.73
No Tier 3 Until After Earnings
The price of the spread is currently 1.40, so a small drawdown.
The short option is 3% higher than current price. Here is the earnings movement for FB:
While the past few events have been negative, it’s still not a good “comfort zone.”
Here is the adjustment:
Buy to Close FB Aug 170/175 Call Spread @1.40
Sell to Open FB Sep 175/180 Call Spread @1.09
We still have our third tier planned add after earnings for the stock.