Parabolic Short in FB

[Steven Place]

A few things are getting me to be slightly short biased here. And keep in mind– I’ve still got some long calls trailing here so this serves as a half-hedge as well.

1. 2 consecutive days above the 2nd standard deviation bollinger band
2. “Obvious” breakout that is being chased
3. Up 6.7% in 5 days. That doesn’t happen often during non-earnings events.

Here’s the trade:

Sell to open FB May 90/95 bear call spread for 0.85 or higher HALF SIZE

ADD to the trade at 1.30 (And buy this back if we come in to .90)

CLOSE the trade at 0.30

I’m not looking for an outright collapse, just a bit more sideways action.

[Steven Place]

The stock did pullback, but not by a large amount. And it didn’t collapse, it just saw sideways action.

I’m not going to wait for my profit target for a few reasons:

1. The stock made a new higher high and higher low.

2. Enough time has gone by to work off its overbought conditions

3. The gap down on April 6th was aggressively bought

4. Earnings are up on deck soon and I want to be out before then anyways.

Buy to close FB May 90/95 bear call spread at 0.55

Total return: 0.30 per spread

Return on max risk: 7.2%

[Author]

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