FB Analysis

Facebook Inc. (FB)

Update 6/16/2017: FB traded sideways during the brief lifespan of this trade, and I exited at 4.8% of maximum potential profit.

Shares declined by 1.0% over three days, or a -121% annual rate. The options position produced a 5.0% yield on debi for a +610% annual rate.

FB stands at a high level of implied volatility compared to its most recent trend and so is worth looking at more closely as a potential trade.

I shall use options that trade for the last time 10 days hence, on June 23.

Implied volatility stands at 19%, which is 1.8 times the VIX, a measure of the volatility of the S&P 500 index.

FB’s IV stands in the 36th percentile of its annual range and the 55th percentile of its most recent broad movement.

The price used for analysis was $150.69.

Premium: $3.56 Expire OTM  
FB-iron fly Strike Odds Delta
Long 157.50 90.9% 10
Break-even 153.56
Short 150.00 46.3% 55
Short 150.00 53.8% 45
Break-even 145.56
Long 142.00 143.0% 11

The premium is 46% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered an order on FB as described above. The stock at the time of entry was priced at $150.59.

By Tim Bovee, Portland, Oregon, June 13, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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