FB Analysis

xFacebook Inc. (FB)

Update 7/31/2017: FB gapped to the upside by $10 after earnings were published and then traded sideways for the ensuing two market days. I exited for a loss as earnings approached.

Shares rose by 4.4% over five days, or a +317% annual rate. The options position produced a -2.9% loss on debit for a -209% annual rate.

FB publishes earnings on Wednesday after the closing bell.

I shall use options that trade for the last time nine days hence, on Aug. 4.

Implied volatility stands at 30%, which is 3.2 times the VIX, a measure of the volatility of the S&P 500 index.

FB’s IV stands in the 81st percentile of its annual range and the 94th percentile of its most recent broad movement.

The price used for analysis was $165.47.

Premium: $7.45 Expire OTM  
FB-iron fly Strike Odds Delta
Long 180.00 91.0% 10
Break-even 345.00
Short 165.00 50.4% 52
Short 165.00 49.5% 48
Break-even 157.45
Long 150.00 91.0% 8

The premium is 50% of the width of the position’s wings.

The risk/reward ratio is 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 $165.19.

By Tim Bovee, Fukuoka, Japan, July 26, 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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