Facebook Inc. (NASDAQ:FB), for all of its heartache for investors over the last three months, is still running a transcendent brand, according to a recent report. But does that brand recognition, or something else, translate into the company being one of the darlings of options traders?
Well, maybe the option traders are not paying much attention to the brand trancendentalism indicated in Landor Associates’ “Breakaway Brand” report for 2012, but there are traders who believe that eventually Facebook Inc. (NASDAQ:FB) will be a good option play in the very near-term. One option trader revealed his idea to make some money on Facebook Inc. (NASDAQ:FB), and it doesn’t appear to be very tough to do in the current climate (with Facebook currently struggling to stay above $18 a share). First, the trader suggests buying a November/January call calendar for less than 50 cents (selling the November 22-strike call for 60 cents, buying the January 22-strike call for $1.05), which he says would translate into profit for the trader with profits above $22.45 at the January expiration of the call, but also on losses below $22.45.
The analyst suggests the timing because Facebook Inc. (NASDAQ:FB) still has a couple of key lockup dates that are coming, so he theorizes that the stock will continue to fall, likely through November, before being primed for a rally.
And the brand growth of Facebook Inc. (NASDAQ:FB) over the last three years may have contributed to the inflated stock price in May, as the company grew its user base by 300 percent from 2008 to 2011, and total minutes spent on the Facebook we site rose by 2,000 percent (yes, that is 20-fold) – which means that Facebook has been successful not only at getting new users, but keeping those users on the site for longer periods of time. Making Facebook a significant use of our time just adds more to the company’s recognition in the current sociaty and culture, which is what made Facebook the No. 1 Breakway Brad and is expected to continue that momentum through 2012 and beyond.
Whether this will translate to better stock prices, of course, in another question; the big question is whether Facebook Inc. (NASDAQ:FB) can monetize its ubiquitous brand effectively. But improving the fortunes of the company’s stock is certainly of interest for investors like hedge-fund manager George Soros of Soros Fund Management.