Earnings Beat – FB Trade
Good day Insiders,
Facebook is scheduled to report earnings post the close today and we are ready and waiting with our trade. At the time of this update, implied volatility levels are at roughly 87% which gives us an expected move of +/-$11, and with the stock trading at 182, our range is 193 and 171 on the up and downside respectively. Let us construct our trade with these levels but with an added twist, having seen what Facebook is capable of on their earnings calls, we are going to leave extra room on the downside for potential s**t hitting the fan outcome.
We will be selling a put spread, buying the call spread and of course our butterfly for protection on the downside.
Risk & Reward
Our trade uses $5,600 in margin and our breakevens are 171 and 193 on the down and upside. Now for cherry, we have protection on the downside all the way to 161, let’s see where after hours takes us.