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Facebook - FB Earnings set-up and ways to play.
2 min read

Facebook - FB Earnings set-up and ways to play.

Facebook - FB Earnings set-up and ways to play.

Overview

Facebook - FB  reports its fiscal Quarter ending Mar 2020 after the bell today. The consensus EPS forecast for the quarter is $1.72.

The Set-up

FB stock was ~$225 in late January, hit a low of ~$145 in March and has now rallied back to ~$196. It is 7% higher today with the market and especially given GOOGL's post earnings action

Ways to Play

For those looking to catch a move like GOOGL's the set-up is now slightly different for FB as GOOGL was down on the day into its print and at its lows of the past week. FB has already reacted positively today into its print. Therefore one needs to be careful about premium paid versus the expected move. For the bulls, here's a look at options. This is based on a ~$207 price target vs current stock with options expiring May 8th:

This is how the long 195/207.50 call spread looks on the chart, vs expected moves:

The breakeven is right about $200 in the stock so it needs a move beyond that in the next week to make money. But that spread alleviates a good portion of the risk on the outright call, as its breakeven is above 202.50.

The short put spread is much higher probability of profit but the risk/reward is much worse for the price target and is a different set-up with the stock higher into the print in case FB disappointed. But all options should be considered and compared to find the right fit.

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