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Home › Forums › Trading Earnings Live › Upside Bet in FB
The stock is closing into all time highs into earnings. This is generally bullish, but not massively bullish.
The average move is around 9%, although the past two earnings events have certaintly skewed the results.
The options market is pricing in around 7%, which I think is pretty fair.
So I’m expecting a continued upside move, but not a massive blowout as a lot of the good news gets priced in as we hit all time highs.
Here’s the trade:
ET Live Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
BTO | FB | 5 Aug 16 | 123 | Call |
STO 2x | FB | 5 Aug 16 | 130 | Call |
BTO | FB | 5 Aug 16 | 140 | Put |
Total Debit: | 1.72 |
Keep in mind that these are not front week options, they are next week options. I’m doing that to give me a little wiggle room when it comes to executions.
Here’s the risk:
The outcome is like this:
1. FB sells off, out a little bit of money
2. FB rallies to the priced in move, good gains
3. FB blows out higher, larger loss
Breakevens are around 125-135, which is shown in this chart:
Trade orked out well. FB spiked to 134 in the aftermarket, and ground back down to 128. It’s probably going to be a little rangebond yet I want to take profits here as I’ve captured a good amount and the options still have another week to go.
ET Live Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
STC | FB | 5 Aug 16 | 123 | Call |
BTC 2x | FB | 5 Aug 16 | 130 | Call |
STC | FB | 5 Aug 16 | 140 | Put |
Total Debit: | 3.65 |