Everyone’s favorite and/or most-hated social media stock is setting up for what might be an epic run.
In the most recent All Star Charts Monthly Conference Call, JC laid out how Facebook $FB could easily make a run towards all-time highs, targeting 240.
Well, this week we saw Facebook trade past $200, signaling the start of the race!
My favorite part about this chart is what you don’t see: the premium in $FB options is currently near the lowest levels we’ve seen all year.
This sets up a nice, easy way to ride a wave higher — simple long calls.
Here’s the Play:
I’m buying June 240 strike calls for $5.40 or cheaper. These calls currently sport an approximately 25 delta, which is my sweet spot between affordability and leverage when buying long calls. This is a defined risk play where the most I can lose is the premium I paid and I’ll size my position accordingly.
That said, if $FB closes below $188.50 at any time before June expiration, I’ll close my entire position and salvage whatever premium is left in the calls (if any). A close below $188.50 says we’re too early.
On the upside, I’ll look to close half of my position if I can do so for double what I paid for the calls. Then I’ll attempt to ride the remainder of the position into June expiration, not making any decisions on exiting on weakness until we get into the month of June.
ASO subscribers can send any questions to me here.
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