Facebook, Inc. (FB) is a social networking company engaged in developing products that enables users to connect and share through mobile devices and personal computers offering services focused on people, marketers, and developers. The stock is currently trading around $96.30 at the lower end of its 52 week range of $70.32-$99.24. The stock has been out performing the market this year rallying 23.05% year to date. FB is scheduled to report earnings after the closing bell today, and the stock is up $1.01 or 1.16% on the session ahead of the close.
Over the past 12 quarters FB has rallied on earnings day 8 times with an average move of 8.70%. The stock appears bullish on a chart going into the release having traded above the Ichimoku Cloud since mid-June on the daily bars. Over the past 12 quarters FB has rallied on earnings day to expiration 7 times with an average move of 9.07%. Investors are mainly interested in the monthly active users number and expect to see a continued revenue growth number. With a very bullish chart, great earnings history and strong revenue growth it is hard to justify anything but a long position on FB.
The options market is currently implying a move of around $8.10 or 8.4% in FB by this Friday’s close giving us targets of $88.20 and $104.40.
Trade: Buy this week’s 102-104 Vertical call spread for $0.50
Risk: $50 per lot
Reward: $150 per lot
Break Even: $102.50