The reason you bought has nothing to do with anything rational. The bet is just a big gamble. There are many more ways to more conservatively invest in a FB going up. You my friend are throwing money on a roulette table trying to get as big a pay off as possible.
That is why you bought contracts with 150 strikes. Rule of thumb says to buy ATM or ITM otherwise you are paying for mostly speculative premium. That's your choice but I don't think you can make it into a "smart" play
Never follow the option players. People in the know are not investing in far otm options because these contracts are a big ripoff. These are just a lot of speculators trying to pick up options as cheap as they can find. These contracts are expensive and need a big run to even break even. A person investing in otm will do better provided there is moderate rise.
$5 out on a November expiring option is still quite a ways otm. There will be no (or very little) iv after earnings so your end play is for your option to go itm otherwise it will have very little value. Right now most of your premium is speculative premium which is really implied volatility.
After earnings are announced you have what is called volatility crush and it is common after events which have a lot of expectations. You need for the FB to to go to 85 plus your premium to break even. The option can have some extrinsic value post earnings but nothing near what it is before earnings.
A little advice. If you are itm right in the morning after earnings, sell your position. If you want to keep playing initiate another position. Many times they will bleed the value out of an option very quickly. People who have not invested through earning with options are often disappointed with the results. Every once in awhile there is a big gain but that is the exception not the rule.
What?! You have mostly iv. Don't look at delta unless the option is itm. Your most likely are looking at options that are far otm. The only premium they have is iv and theta. They won't budge hardly at all
Worst case scenario is that you lose twice as much as just holding a long position...............less the premium of course ;).
If there is a small drop and your short puts are ATM or OTM, then your premium might cover the drop in the stock.
There are other ways to do this if you want to hear about them. The best way is to write a call far otm.................Do remember that you will limit your position's ability to rise above the short calls. This is always the quandary.................. We all want a position that makes profit but creates no loss:/
Writing a put is very similar to a covered call. It sounds dangerous but if it isn't leveraged its not any more risky than holding a long position.
If you want to wade into this, write a put and buy a put 2 to 3 strikes below your written put. This gives your position a hedge against a big fall. This is bull put spread. I know you will see a lot of premium for puts otm so this hedge cost some money.
If you are going to hold through the earnings the best earnings will be with a straight naked put if the stock rises. It will also be able to be bought back real cheap if the movement is up or there is no movement.
if you hold a long position and the stock drops $5, you are at a $5 loss. If you hold a short put atm and the stock drops $5, you are out $5 minus the premium you received.
Sorry, I just thought you were irritated. I apologize for jumping the gun. I know we both look at it at a bit of a different angle but I hope you do well through earnings.
Cashbar, I never said anything nor did I give a direction. You are assuming what you believe my intent to be. I also stated that this does not dictate what will happen.
I have a question for you: How do you base where you believe the stock is going to go?
If you have no basis it is just a belief. While this post was innocuous, I know it still irritated you because it played with your beliefs.
I don't want to talk trading with you because it usually goes tangential and goes no where. You also don't know how to trade. I didn't write this post to irritate you. I wrote it so everyone could see what happened and they can make their own decisions on how they want to trade.
We all have our own idea of how FB might move after earnings. It is good to be armed with info so you can know what could be possible..
Following are Facebook's reported and consensus eps numbers for the last four quarters. The reported eps and consensus estimates are in non-GAAP numbers. For each quarter, there are 5 days closing prices before and after the earnings. The day of the earnings announcements are in parenthesis.
Consensus estimate: .32
Actual earnings: .42
Consensus estimate: .24
Actual earnings: .34
Consensus estimate: ..27
Actual earnings: .31
Consensus estimate: .19
Actual earnings: .25
There are many other reasons why stocks fly or sink after earnings but this gives everyone a good idea of potential ranges as well as scenarios through FB earnings.
Both statements are untrue. GOOG revenue was not down and FB revenue was not 15% above estimates. You need to understand the difference between revenue and income.
I am sure you etal can find something that is true about FB instead of posting falsehoods.
Once again your wrong. GOOG's revenue is up. Learn the difference between revenue and income.
Also take a little bit of time learning key metrics that drive stocks.
I am not saying FB will do poorly or do well. I am saying you need to learn that $16.523B is larger than $15.955B.
GOOG has increased revenue sequentially every quarter this year. Besides GOOG's divestiture of Motorola last year, their revenue has grown sequentially for quite a long time. FB only increases its revenue by 15% every other quarter.
The type of revenue of both companies is different. To top that off Trying to make a comparison and say there is a money flow is a bit futile because it wont materially affect Facebook's revenue.
Its all right if you are bullish on FB but posting numerous falsehoods with your 20 other id's is getting a bit old.
What is meant by next Google? These big gambles of yours are not investing.
Facebook will not buy Yelp! Stop making stuff up.
FB is doing well but you cant make a comparison to GOOG. It is apple's and oranges. FB looks like it will do well in the future but 200 looks like what you would like to happen not a highly probable target.