Wednesday, November 4, 2015

FB Analysis

The social networking company Facebook Inc. (FB), headquartered in Menlo Park, California, will publish earnings on Wednesday after the closing bell.
[FB in Wikipedia]


I shall use the DEC series of options, which trades for the last time 44 days hence, on Dec. 18.


Implied volatility stands at 37%, which is 2.5 times the VIX, a measure of volatility of the S&P 500 index. FB’s volatility stands in the 48th percentile of its annual range.

FB's volatility declined below the 50th percentile in the first hour or so of trading. Given that decline, I can now skip the rest of the analysis and go directly to a decision.

Decision for My Account

For this sort of trade, my standard requires implied volatility in the 50th percentile or greater of the one-year range. The volatility decline puts FB outside of my standard, and so I shall go no further with the analysis and don't plan to enter a new position on FB.

-- Tim Bovee, Portland, Oregon, Nov. 4, 2015


Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.


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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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