Facebook Inc. (FB)
Update 2/7/2017: FB reached its target price and I exited for a profit.
Shares declined b7 0.6% over six das, or a -36% annual rate. The options position produced a 33.3% yield on debit for a +2,028% annual rate.
FB publishes earnings on Wednesday after the closing bell.
I shall use the MAR series of options, which trades for the last time 44 days hence, on March 17.
Implied volatility stands at 30%, which is 2.6 times the VIX, a measure of the volatility of the S&P 500 index.
FB’s IV stands in the 55th percentile of its annual range and the 87th percentile of its most recent broad movement.
The price used for analysis was $132.68.
The premium is 52% of the width of the position’s wings.
The risk/reward ratio is 1.2:1.
Decision for My Account
I have entered a position on FB as described above. The stock at the time of entry was priced at $132.74.
By Tim Bovee, Portland, Oregon, Feb. 1, 2017