Posted: 7/27/2012 2:40:57 AM
Facebook (FB) Bearish Straddle Update
Stockholders were not happy with facebook's earnings report. Facebook did reported EPS and Revenue in line with estimates. My bearish trade looks like it will work to perfection. Just as I expected in the after-market facebook sell off heavily. FB closed out today at 26.845 -2.495 (-8.5%). This already was good for the puts that I bought.
In the after market FB has now reached its all time low. It is at 23.97 -2.875 (-10.71%) in the after market as investors were not happy with the earnings report. This is just a beautiful trade thus far.
Plan - When market opens I will sell the 15 $30 calls for whatever I can get and net a small loss compared to the gains I will get from the $30 puts.
I plan on letting this baby ride until 20$. Once FB reaches $20 I will sell either some or all of the puts to net a profit.
If FB moves against me I will unload the puts at $25 to guarantee a profit.
AMZN barely missed Q2 earnings estimates. It did however show revenue growth from last yr Q2 to this year. At first in the after market, AMZN went all the way down to $205. It is currently at 221.55 and set to open about 1.50 higher than it closed at.
This is going to be a tougher trade to make money off of as it looks like AMZN is not going to move huge like it usually does after earnings.
The fact that AMZN missed earnings and is trading at such a high P/E ratio still leaves me very bearish short term.
Strategy - It looks like AMZN is going to run up in the short term. I still think it is going down in the medium term. Depending on how AMZN moves will dictate what I do. If AMZN runs up today I will let most likely unload the puts and let the calls ride. If it goes down I will do the opposite.
This is going to be a more difficult trade to profit from because there doesn't look like there is going to be significant movement in either direction. If I straddled AMZN I would be in a better position right now.
I slightly changed my position today with the AMZN strangle.
Sell To Close - AMZN $230 Aug 18 Calls (15) for $5.80.
Net Loss $-1125.00
Buy To Open - AMZN $225 Aug 18 Calls (15) for $7.85
Should be a great day today!