FB GAP DOWN IS A HUGE BUY OPPORTUNITY
Facebook's earnings report a week ago upset investors and the stock fell more than 15% forming a huge gap.
Now stock is trading with P/E ratio of ~20 which I believe is very low for tech stock such as FB. Twitter has a P/E of 3X that of fb. Solely P/E is definitely not a good way to analyse any stock, however my analysis tells me that facebook still has huge potential and it is not to be traded at such low levels. FB has potential to generate cash and Zuck is definitely not a man who wouldn't want to use that opportunity.
Anyway, I think this is one of these Jamie and Charlie opportunities, Here is my strategy:
SELL SEP 13 195 PUTS
I will be shorting puts because I believe that the recovery will be steady and may take time. Selling puts is risky because if the stock drops you can lose way more than you have invested. However, Because I believe that there will be a steady comeback, selling puts is better because options are cheaper every single day due to THETA, which means that calls will be cheaper every day, therefore selling puts with high theta will be profitable even if the stock stays at the same levels.
Facebook's earnings report a week ago upset investors and the stock fell more than 15% forming a huge gap.
Now stock is trading with P/E ratio of ~20 which I believe is very low for tech stock such as FB. Twitter has a P/E of 3X that of fb. Solely P/E is definitely not a good way to analyse any stock, however my analysis tells me that facebook still has huge potential and it is not to be traded at such low levels. FB has potential to generate cash and Zuck is definitely not a man who wouldn't want to use that opportunity.
Anyway, I think this is one of these Jamie and Charlie opportunities, Here is my strategy:
SELL SEP 13 195 PUTS
I will be shorting puts because I believe that the recovery will be steady and may take time. Selling puts is risky because if the stock drops you can lose way more than you have invested. However, Because I believe that there will be a steady comeback, selling puts is better because options are cheaper every single day due to THETA, which means that calls will be cheaper every day, therefore selling puts with high theta will be profitable even if the stock stays at the same levels.