FB Analysis

Facebook Inc, (FB)

Update 7/10/2017: FB rose for two days after I entered the position and then fell sharply for more than a week before beginning a two-day rise (so far) that brought the position to my target price. I exited at 24.9% of maximum potential profit.

I reached that point by rolling the position forward, as noted in the earlier update below, The results calculation is based on the entire series.

Shares showed a net rise of 0.06% over 18 days, or a +1% annual rate. The options position produced a 33.2% yield on debit for a +672% annual rate.

Update 6/27/2017: I rolled FB forward to a later expiration, leaving the strike prices in the structure unchanged.

The roll cost $0.23 for the exit and brought in a $4.75 premium from the new position, for a net premium for the series of $4.98.

I shall defer calculation of results until the series is complete.


FB shows high implied volatility, making it a candidate for non-directional trade.

I shall use options that trade for the last time 15 days hence, on July 7.

Implied volatility stands at 20%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

FB’s IV stands in the 38th percentile of its annual range and the 59th percentile of its most recent broad movement.

The price used for analysis was $153.86.

Premium: $3.61 Expire OTM  
FB-iron fly Strike Odds Delta
Long 162.50 94.3% 6
Break-even 158.61
Short 155.00 59.1% 42
Puts
Short 152.50 40.7% 58
Break-even 151.61
Long 148.00 87.5% 12

The premium is 60% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered an order on !S as described above. The stock at the time of entry was priced at $153.83.

By Tim Bovee, Portland, Oregon, June 22, 2017

Disclaimer

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.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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