Tonight Facebook reports earnings, where will the stock head afterwards? The option market is pricing in an over $4 move, will we get get that? Facebook $74 or $66? Or will the stock make an even bigger move?
This time last year Facebook was busy moving off sub $20 levels. Now sub $70 levels... what levels will it be working off this time next year? $110 levels?
The $74 calls that expire this week are $.89 the $66 puts are $.80. The call to put volume is over 3 to 2.
What do I think? I think $FB breaks out to fresh all time highs after the bell today after it reports earnings and closes the week over the $75 level.
I will be a buyer of $74 calls at some point today for that move. The risk to that trade would be if $FB moves only 1-2% higher or trades flat or lower. I have to not only be right about the reaction to $FB earnings, but also to the size of the reaction.
Could we get a similar reaction to earnings like this time last year (shaded circle in the chart below)? Anything is possible.