Since it came to market Facebook Stock has provided a lot of investors little but headaches and losses. But for those Put Selling against Facebook Stock the returns have been significant. Put Selling has been simpler and certainly a much easier Stock Investment method than buying shares and trying to time when to sell them.
This morning’s plunge in Facebook Stock is another great example of the power of Put Selling versus a Stock Investment in Facebook Stock shares. The news of ZNGA Inc . (ZNGA) earnings drop hit Facebook Stock with a 6.3% out of the gate plunge this morning. But for Put Selling this kind of news is perfect for driving up volatility and creating excellent earnings potential.
Stock Investment In Facebook Stock
The key to understanding Put Selling Facebook Stock is realizing that right now at least, Facebook Stock is not a great Stock Investment. It may be one day but right now as far as a Stock Investment is concerned, it is far better to consider options.
Below is the chart for Facebook Stock since it commenced trading. While dismal as a Stock Investment, it has been fabulous for my Put Selling trades. When in early June Facebook Stock plunged to $25.52, I commenced Put Selling at the $22.00 strike using the Weekly Put Options. Today again the $22 and $21 put strike are my favored choice.
Put Selling Facebook Stock
Presently I do not believe Facebook Stock is a worthwhile Stock Investment, but for Put Selling Weekly Options, it has been terrific. Facebook Stock meets none of my investment grade guidelines except for one. It pays no dividend, has no track record but it has almost a billion users worldwide. While most investors are expecting very good earnings, I have no measuring stick to use. But I do know that with a billion users worldwide someone is going to be clicking on ads and surely Facebook can generate 8, 10 or 12 billion in revenue annually.
I am staying a long way out of the money with my Put Selling and doing nothing but the weekly puts and I am using The Shark strategy to time in and out points. For example, below are the weekly put options for this week. Today I sold the Facebook Stock Aug 3 $22 puts for.35 and the $21 puts for .20.
The Shark Strategy And Put Selling Weekly Options
I developed the Shark Strategy years ago by combining the Fast Stochastic and Moving Averages to pinpoint when to buy and sell options. I have used it both on puts and calls but for Facebook Stock I am using The Shark Strategy to only do Put Selling of options. The Shark strategy does not rely on news events regarding Facebook Stock or any technology info. The Shark Strategy is purely a stock price action trend following strategy which I have been using for the Facebook Stock price since the stock came to market in May and collapsed.
I use the Shark Strategy on Facebook Stock for Put Selling Weekly options only. I am not doing monthly or longer Put Selling against Facebook stock. This morning when the stock plunged I consulted the Shark Strategy and it identified the opportunity.The Shark Strategy outline is contained in a for sale PDF entitled “4 Investment Strategies For Ultra ETFs”. While the PDF article is focused on Ultra ETFs, the Shark Strategy can be applied to any stock with options. The Article costs $25.00. The Shark Strategy is one of the 4 strategies outlined in the article. For interested readers it is available in my store through this link.
Put Selling Facebook Stock
I do not often use Weekly Options as I have found few that provide decent premiums for the risk of my capital. However Facebook Stock volatility is such that it has kept Weekly Option premiums high making it perfect for The Shark Strategy. As well, I use the Shark Strategy for my Facebook Stock Put Selling because the strategy requires only small amounts of capital and there is no commitment of capital toward purchasing stock.
I also find with Weekly options that stock direction can be a problem but again The Shark strategy contains the moving averages combined with Fast Stochastic and as such it follows the stock trend to pinpoint entry and exit positions.
Facebook Stock is under extreme pressure to perform. Institutional investors who bought in at the outset are furious over the collapse in value. I don’t have a clue as to what the future holds for Facebook Stock but I do believe there is probably not much downside presently beyond $25 or $24.
Remember that nothing on my site is financial advice but are my ideas only. Overall the debacle in Facebook Stock goes to show that stock investment is risky for everyone, even the pros, but for those who are willing to think a little outside the box, setting up a strong Put Selling strategy based on sound stock technical analysis can provide decent returns while providing some protection against large losses.