FB is projected to earn $3 (actually $2.86) and that is a decent number. One of the mistakes made in applying value metrics to growth stocks is this:
The analysts consensus is a non-GAAP number and the actual PE is based on a GAAP number. This year FB is slated to have earnings of $2.16 yet their trailing earnings are around $1.00 which is more than half their projected number.
So even meeting their projected consensus earnings , FB could still have a PE of 60 to 70 at the current share price.
Red, I am not saying this to make a bear case for FB but there are some misconceptions about utilizing value metrics like a PE on a growth stock. One thing that is common among most growth stocks is that they are evaluated on a non-GAAP basis which does not produce a PE. It produces a multiple which is a future number less one time events, stock and option expensing, ect..
I believe their is a good likelihood that FB has really decent chance of good price growth next year. The growth will not be based on a PE. It will be based on the market's perception of the prospects for future growth. The thing that PE's allow us to do is to compare stocks and it lulls us into thinking if a certain stock has a higher PE then ours should have the same. This is not what drives stocks like FB and AMZN. Each has its own story and the stories cant be compared. Whether FB has a PE of 160 or 20, it wont matter. It is what people believe it will do in the future. With a multiple of 2.86, FB would have trailing earnings of around 1.32. Based on interpolation.the PE would be 114. That is not exactly what it will be because no one knows how FB will report.
................but it doesn't matter because FB will grow its price based further out in the future and not on what the stocks current or near term PE suggests.
A lot of the boards. I remember RIMM and GOOG and FCX. Everything but stock. I don't want to discuss politics or racism or hatred. I can imagine the GE board.
Something that would kind of be novel is to see other's opinions on stocks.
Trump has nothing to do with the stock Facebook. Even in a contrived sense it wont have any affect. I agree with leeharold to keep the politics off of a stock board. There are political chat boards and that is where politics belongs.
It looks like it will settle on or near 108. At the end of the day, there will be a swing. Could be $.50 to a little over a buck. I usually play butterflies into expiration for FB. If I can figure a pin a week out, I will do long butterflies. I don't have a position because I don't have a good read.
What I am saying is just from many observations on Fridays. Next week is a short week and some people will take their vacation early. That is why I see the break at the end of the day which will follow the mood of the market. I don't have any real technical reason nor do I have a good gauge just kind of a hunch.
GL and happy trading!
It doesn't look like there will be much option action because oi is pretty low....There is a little pull at 105 but not a lot. I don't think FB has the gas to get to 110. The morning swings are not powerful .so in lieu of anything else happening like an announcement, FB probably wont get to 110.
I miss all of Cramer's shows but he did not say 3.75 in July of all times, Of all the analysts, the highest forecast is 3.16. No one is saying 3.75 except you. Saying..."oh it was 4 months ago but you must have missed" is a statement a person in junior high would use, Besides Cramer is the worst person to listen to. Period
I know you learned not to make things up right? This was when you were maybe 6 or 8. You're a lot older now so please stop it.
Dude at least do your math right (3.75-2.16)/2.16 x100 equals 73.6% not 275%. No one is saying $3.75 in fact the highest analyst is saying $3.16 and the consensus is $2.86.
FB wont trade at 100 times next years multiple nor will it trade at about 200 times earnings. You still mix up a multiple and a PE. They are different and your numbers would get you an F in math. Please don't post numbers if you don't understand math.
Refiners like TSO and VLO have been doing well. MCD, SBUX and many retailers are doing well. Those are a few you may look at. GL
This takes affect in February 26, 2016 from what NYSE announced. This is to get rid of GTC orders and stop orders that sit out for a long period of time like a month. Their stated reason is to mitigate risk associated with these orders and to alleviate automatic selling and buying when there is a lot of volatility.
Good bad or otherwise that is their reasoning.
These are just orders going through NYSE While NYSE has some derivatives, the majority will be traded through exchanges like the CBOE. Anyway most options need to be actively traded because they are a wasting asset.
There is no one saying $3.75 next year. Nice try. FB is doing well and producing decent earnings growth. The consensus is $2.86.
I Don't know how you figure $500 in 3 years but most likely wont grow that fast.
Take the decent growth that is currently happening and be happy.
You cant watch stocks on a day to day basis. ALL stocks go up and down and the higher fliers are going to be more volatile. Today is just options action and it combines with what would be otherwise a low volume if this was not expiration this Friday.
You mean 2.75. Right? The highest analyst is saying 3.27 with average of 2.86 and Cramer as much as he is a shill is not saying that. How does your price point correspond to 225? The current price is about 50 times this years earnings. $2.16 x 50= $108.00. Remember a multiple is not the same as PE. The multiple is non-GAAP while the PE is GAAP
Facebook will do well but your analysis is a bit suspect and your numbers are exaggerated. If Cramer said $3.75 (which I am sure he didn't), shame on him and it is not worth repeating. You cant multiply next years expectations by the current PEs because the PE may be half of the multiple. I think FB should keep moving up but it probably wont double in a year.
If you are holding short dated otm options, you want to keep them rolling. There is always some risk to holding these options.
If you are playing an option $2 dollars out and have a conviction that a stock is going to move up, you could roll down and buy cheaper options and take profit. For instance lets say you buy a 30 strike call and it is $.60 and you sell and you re-buy a new option $2 itm at $.20 , you have taken profit and you can remain playing with a more leveraged position. This is not without risk as the lower option has the potential of going to 0 as time transpires and the stock drops but you kept some profit.
If you play longer term options that are closer to the money, you can roll them easily and keep playing them as long as a stock follows your conviction. The losses are less when there are losses but the profit is less on a percentage basis also.
If you initiate delta neutral positions, you want to play all the way to expiration like vertical spreads. (Time is your friend on these spreads) A position with a short lower strike and a long higher strike will produce a credit when initiated If the option is otm by expiration. You keep the credit or the difference when closed. If higher, then your loss is the difference between the two strikes less your initial credit.
If you are short the higher strike and long the lower strike, the opposite happens. You have to pay for this position and your maximum gain is the difference between the strikes less the amount you paid for the position. You can also play straight short options. Spreads mitigate the potential high loss.
There are other different types of spreads (ratio'd), butterflies, condors, horizontal and diagonal spreads. A person can play time, volatility, implied volatility and other variables with options.
I used to do a lot of option posts when I was playing GOOG about 9 years ago but now I just don't have the time. I will answer questions, though.:) Good luck
What I meant to say when locking for options that correspond to the last earnings...................
In buying options, you are looking for actual volatility as opposed to implied volatility to make profit. I tend to think that the times before or after earnings are the best time to play options.
Volatility is just the rise in price. Without the rise there is not really a good play. A $5.00 pop gives quite a nice play and if you want to make money that is the way to do it.
Even longer term options with multiple earnings in their timelines will experience some crush through earnings. IV is something that most people perceive as some sort of magical number derived out of Black Sholes solution to the differential equation characterizing the European style option. Others look at it as a stochastic number which is set forth by the Market makers of the options exchanges. It is much more simple. It is just basically a measure of demand and around something like earnings there is a built in number where traders speculate a price point. While there are a few other factors, you can go a long way if you consider this as your model for IV. After earnings are done, there will be less speculation therefore there will be some IV crush on all options.
I am curious why you didn't buy ITM options at strikes of $100 or $105 if you are paying the extra premium of March options. These would have netted you a better gain than 110's. The deltas are much higher and the percentage of IV as to the overall option price is lower.
Short term options bought 3 weeks out could net a multi bagger with the earnings gap.
Good job on the play, however, if this was played Q2 2015 it would be at a loss. I tend to think that earnings are not sure bets. They are nice gambles and if you hit you can make a lot of money but most of the gains are not through earnings but in between earnings. My philosophy is to make money on more predictable times.
Once again, congrats on your play!
A tin can sits on the grass
silently collecting rain
The rust gilds its seams
as the trickles make life
in a dull sense to behold.
By the can, sits the tree
which slowly grows
by the water of
the same rain
coming from prudence's will.
The buildings shades the tree
and all inside abide
by the market's gift
with fruition at the helm
in equities till.
The can spills its booty
under natures guard.
The wind shapes the air
If you look up a drop
carries light in color.
The market shows observance
to the simple theme
that creates a trend.
The can sits quietly
until rust blights its structure.
A just term for tenacious existence.