Bullish sentiment on Facebook Inc (NASDAQ:FB) trading above the $85 mark continues to soar heading into its first-quarter earnings call. The stock has enjoyed an impressive run over the past 12 months buoyed by the ongoing plans to monetize most of its products. In the past, Option Action traders, had resorted to selling the stock on earnings, but not this time around, affirms CNBC contributor, Guy Adami, who believes the stock is closing in on the $85 mark.
Mike Khouw believes the stock remains cheap at the current trading levels with an upside rally of between 5 and 7% all but set on an impressive earnings call. Facebook Inc (NASDAQ:FB) remains one of the most traded in Options trading in terms of volumes as more bullish bets continue to be tabled. Puts bet currently stand at 2.5 times of the total volume traded
One trader could be seen buying 4400 of the $84 strike calls and then selling $87 calls; points out Mr. Khouw
“They spent $2 on the first calls and then sold the others for a $1 which they sold twice as many. They basically laid out no money to make a bullish bet that Facebook is going to trade to about $87 by the end of the week,” said Mr. Khouw.
The trader stands to be profitable on the trade even on Facebook Inc (NASDAQ:FB) rising to the $90 mark. Heading into the earnings call Facebook Inc (NASDAQ:FB) is only $3 shy off its all-time high of $86.07 and looks likely to clock the milestone, based on the recent impressive run. Investors will closely watch to see the kind of numbers the social giant will post on its digital advertising business that remains one of its core businesses.
It will also be interesting to see whether its user growth picked up in the first quarter at the back of the ongoing fear that the network might be losing the young generation who are opting out, for other upcoming networks.
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