That is probably a good idea. It looks like the option mm have it in their cross hairs. There have been a few algos but it keeps swinging down. Good luck and may your trade on Tuesday be great!
There are a fairly large amount of options itm. If FB gets a lot of volume it could escape the gravity but if it doesn't it could get pinned. The key is the long holiday and will there be enough volume to continue yesterday's rise. Good luck
They are 5 cents because no one thinks they will get there today. The nickle options also cost .10 to .15 and a person who buys will have to sell across the bid ask spread plus pay the arbitrage MM a dime. it is not as cheap as it looks.
You have to watch the early morning trade. While momentum may overcome option pin pressure if the stock opens and goes up and then pivots it could be pushed towards a pin. Also it is a long weekend and some people may sell. Now that is not to say that FB is going to go down.
Also remember most of today's trade was program trades and some momentum followed in the afternoon. The big traders will not likely be loading up tomorrow. If volume is sparse tomorrow, then there is a possibility of a capitulation. I personally think it will be pretty flat but if the momentum continues then it could do well.
Watch the morning and there is fair possibility of a big head fake with a drop into the afternoon. If it opens flat and slow, you will probably see about + buck. That means the manipulators are not in full force and momo is building.
Good luck and happy trading
It does defy logic. I used to try to short both CRM and RIMM when it was going strong. They just kept going up and up and up. It just was inexplicable. Right now the shares on TWTR are pretty thin and I think it will trade a little bit more normally once the lockups expire.
However, sometimes its hard to figure out why stocks behave the way they do.
It depends a lot on the beta of the stock. One of the big factors in prices is what people speculate for the movement of the stock. This is called implied volatility. Part of the study is to watch some individual stocks. There are some million dollar opportunities in some biotech many of which could move on a percentage basis much larger than FB. The only problem is they may not move in the same time line as your options expirations.
The key is to watch the options and you can play safer option plays like spread plays where part of the tricky part of the option movement is alleviated. These spreads are buying and selling options at the same time. Also spread plays are actually easier to make money than straight option buys. And example is a bull call spread where you sell the higher call and buy the lower call. This gives you fixed return but the sold call makes the spread less costly than the normal bought call. There is a back spread and that is selling 1 call and buying 2 calls ( 1 to 2 back spread ..........3 other ratios can be used but this is the most popular). The return is not fixed but this has a range problem where if the stock ends in the middle of the bought and sold calls it is lossy. These are ways to mitigate risk when trading options.
I used to look for the option prices as a percentage of a stock price and you find that it is not really a valid way to look at the options. A book that I would recommend is any book by Mcmillan. He is the option god. Also you can view some free online option courses at CBOE and OIC websites and they actually are informative. The big thing is that options don't move like stocks. I wish you success and if you have any questions please ask.
The same valuation metrics are not used because TWTR and FB are growth stocks and neither is valued on a value metric. They both are valued on how much people believe their respective growth stories.
I hope you do well and if your in Seattle I will do the same. Good luck
2.55 trillion dollars? So about 8 times what GOOG is now. They would need around 800 billion in revenue. Well i guess 1/100th of that......so who knows. :30
Bet ATM or slightly OTM with LEAPS. Don't bet 50K on it either. and it is better to give up some leverage. It also realistically very unlikely that FB will be 200 in your time frame.
Worse case is you lose all your money. No one knows where it will be. Don't gamble.
Option rules you should remember:
1) Don't buy options under a buck (you can end up paying up to $30 more across the spread and commish)
2) Don't trade expiring options.
3) don"t parlay an option win into another bet. (Eventually you will lose and most times it is fast). A parlay will wipe you out.
4)Buy ATM and ITM as they will perform better than OTM.
5)Buy a couple months out.
6) Sell options instead of buying them. Sell puts if your bullish. If they are cash covered you can do this with very low level option clearance.
7) Never wish a stock above your strikes.
I am not trying to lecture but I have played options for decades and I hit the option lottery once and blew it all in a matter of weeks. I have known people who have bet their inheritance and houses on options and this was on high flyer like GOOG. They lost everything. I am only giving you this advice because you appear to have just started trading options and I hope it helps.
Look at DNDN about 6 years ago. There were some paper millionaires on options when the stock went from 5 to around 30 in a couple days. It then went back to five just as fast. Most held because they wanted the stock to go to 50. If you play options, you have to have a conservative approach and 80% of the options expire worthless.
There are quite few options itm. The option mm may pin it and it often happens also it is a long weekend.
Now it may go up but that is a roulette bet because you are playing against the house and the itm call options are unwound by marrying them with a short position. There are an awful lot of calls itm and that will put some downward pressure tomorrow.
I hope you didn't put too much money into it because if the stock is below 67.60, they are toast. That is all I am saying.