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For the first time in nearly 6 months, Facebook (FB +3.7%) is trading above $30/share. There's...

For the first time in nearly 6 months, Facebook (FB +3.7%) is trading above $30/share. There's no specific reason for today's move, unless one counts an invitation for a Jan. 15 event that some think could feature a smartphone announcement. Shorts have been covering at a pretty rapid clip, and recent analyst commentary has featured plenty of bullish remarks about improving mobile monetization and the impact of new ad products. Shares are now up 54% since Facebook delivered its Q3 report.
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Comments (7)
  • sheeple2012
    , contributor
    Comments (203) | Send Message
     
    If they are monetizing mobile so much better, how come almost none of the used-car salesmen better known as analysts haven't been raising their estimates for 2013...?
    9 Jan 2013, 12:09 PM Reply Like
  • wigit5
    , contributor
    Comments (4118) | Send Message
     
    analysts were buying as they were telling everyone else its a sell, now look at their position up big time
    9 Jan 2013, 12:15 PM Reply Like
  • hsd2
    , contributor
    Comments (15) | Send Message
     
    Its better if analysts don't raise them.. allows $FB to demolish estimates so the stock can reach all time highs :)
    9 Jan 2013, 03:30 PM Reply Like
  • inkyx
    , contributor
    Comments (434) | Send Message
     
    Wow, FB bulls! You were a rare breed just a while ago. My question is how high up can it go?
    9 Jan 2013, 06:15 PM Reply Like
  • Mercury Value
    , contributor
    Comments (565) | Send Message
     
    hah my brother bought at $17. i stayed away because i didn't know how you would go about valuing it. i'll still stay away. there are plenty of other fine places to put my money, i don't need the gray hairs that go with this speculative roller-coaster ride.
    9 Jan 2013, 06:18 PM Reply Like
  • optionmaven
    , contributor
    Comments (8) | Send Message
     
    I am the OptionMaven. Having traded options for over 40 years in OTC markets and as a member of the CBOE. My basic options booklet was printed by the NYSE; CME and CBOT. (30 years ago).
    What I can do is to take the opinions of your fundamental writers and convert those opinions into option trades or stock and option trades that have less risk and more reward then a 'naked' position in the stock.
    I have managed assets professionally for over 44 years. I am also a litigation expert on security, commodity and options frauds.

     

    My opinions are my own but I will try to explain all the potential outcomes of the transaction:

     

    The article is very bullish on FB. But it also states that the stock has rallied over 50% since its 3rd quarter earnings. And you have over 100 million of stock released to trade.

     

    Therefore if you would like to earn a nice return with little risk here is one options only trade:

     

    I. Buy the 31/36 March call spread for about $1.50 debit and sell a put that is around $27. Cost would be approximately 35 cents (before comm). Stock is currently $30.60 on close today. So if stock went up $5.40 you would make a profit of $4.65 or 90%. Yet on the other hand if the stock went down 10% or $3.50 to $27 you would only lose the 35 cents.

     

    Down $3.50 lose 35 cents.
    Up $3.50 to $34 you make $265. that's. a nicerisk/reward ratio and for just 2 months. .

     

    RISK: if stock were to drop below $27 you would/might be put the stock at $27 but you would save buying stock at $30.60. **note that you can keep rolling the short put down as the market moves.

     

    ======================...

     

    2. Buy stock at $30.60. Then sell the JUNE 31 call and JUNE 25 Put and collect $5.20 in premiums. that reduces your cost to $25.40. (the cash goes into your account)>

     

    Outcomes: stock goes over the call strike of $31. You make $5.60 or 20% for 5 months. That's 48% annualized.

     

    Stock stays the same: you make $30.60 - $25.40 or $5.20. $5.20 on $25.40 almost 20%.

     

    Stock drops $5.60 cents to $25 you lose 40 cents instead of $5.60.

     

    Stock drops below the $25 put price you will now own 200 shares (assume bought 100 and now put another 100). Your average cost of 200 shares would be $25.20. That is a discount of about 18% to today's price.

     

    Conclusion: If you are happy making 20% if the stock goes up1% then this might be for you. Remember to make 20% if you just outright buy stock the stock would have to go to $36.72. Now you make the same 20% if the stock stays the same.

     

    If you had bought stock and it retraced its run up you would lose 20%. Now you don't lose.

     

    Changes the risk/reward profile completely.

     

    Give up any additional upside. If stock rallies 25% by June you only make 20%.

     

    Hope you enjoy these comments.

     

    My email is: optionmaven@aol.com
    10 Jan 2013, 03:09 AM Reply Like
  • krw13
    , contributor
    Comment (1) | Send Message
     
    Intrinsic value ≠ real value.
    10 Jan 2013, 04:44 AM Reply Like
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