Facebook, Inc. (FB) is a California based social networking and information technology provider. At the time of this post (11:45AM CST) FB is currently trading at 77.33, up 2.05% on the day on a generally strong trading session for techs thus far on the heels of Apple’s big earnings beat yesterday evening. FB is currently well within the upper portion of its 52 week trading range of 53.19-82.17, and the company is set to report earnings today, 1/28/2014 after the market close.
Over the last eight quarters of earnings data available, FB has traded mostly bullishly, moving higher on five out of eight sessions immediately following the EPS release. The average historical move during this same time period was 8.1%. Currently the options market is pricing in a slightly lower than usual implied move of approximately 7.07% based on the current pricing of the at-the-money straddle. This would represent an anticipated move of approximately $5.48 in the underlying stock by this Friday’s weekly options expiration. FB is currently trading well over the upward sloping Ichimoku cloud and most relevant moving averages on the daily chart, and has found strong buying support near the intraday lows near 76.00 which held today. As a result of FB’s tendency to trade higher immediately after earnings in conjunction with the current bullish technical setup, I will be leaning bullish this name and looking to establish a long position heading into today’s close.
Potential Trade: Buying the FB Jan 30th Weekly 81-83 Call Spreads for $0.50
Risk: $50 per 1 lot
Reward: $150 per 1 lot
Breakeven: $81.50
Andrew Keene
KeeneOnTheMarket.com
