Facebook Stock and Put Selling Against Earnings

Put Selling is my prime investment method. I stay with dividend paying large cap stocks for Put Selling and once a year I like to pick a speculative trade. I enjoy investing very much and I treat it like a business. As the majority of my stocks are conservative in nature, each year I pick one stock that I consider speculative in nature for trading against with a small amount of my capital.

I do not speculate with penny stocks or juniors but still stay with large cap stocks. Facebook Stock has been my speculative stock since last June when I started with a strangle options play. You can read that Facebook Stock article here. The other excellent trade was in August when I purchased shares as it was undervalued. You can read that Facebook Stock article from August here.

I particularly enjoy Put Selling against Facebook Stock earnings announcements because of the high volatility. Facebook Stock symbol is FB Stock and it trades on the NASDAQ.

This is a FullyInformed Members strategy article. Facebook Stock reports its earnings after hours today. Yesterday I sold 15 contracts the Feb 8 options expiry $26 put for .27 cents. Facebook Stock has certainly had a wild ride since its IPO last May. The stock collapsed by September 4 to $17.55. From there the stock has recovered 82% to a high of $32.51 on Jan 28. The real question for Facebook Stock is how much growth can be expected from today’s earnings announcement. It is growth of earnings that Facebook Stock needs to hold the recent gains and push higher.

Facebook Stock Daily Chart Since May 2012

The daily chart of Facebook since the IPO in May 2012 is below. The key to Put Selling Facebook Stock is determining the strike level to sell puts against and how to establish a strategy that will protect the position I take and allow me to profit from it even if the stock collapses past my put strike.

Facebook Stock since IPO

Facebook Stock since the May 2012 IPO

Facebook Stock Put Selling Strategy

Since Facebook Stock has traded for less than one year and as you can see in the Facebook Stock daily chart above it has had a wild ride, picking put strikes might seem difficult, especially if I want to avoid owning shares should the stock plunge, but it is actually simpler thank you might think to pick the put strikes to be Put Selling against.

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