NEW DIRECTIONAL CALL PLAYS
Facebook, Inc. - FB - close: 105.93 change: +0.91
Stop Loss: 103.40
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 28 million
Entry on December -- at $---.--
Listed on December 28, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: Yes, see below
It's time to get social.
Facebook needs no introduction. It is the largest social media platform on the planet. Last quarter the company surpassed 1.5 billion monthly active users. They also set a new milestone this year with one billion people logged into Facebook in a single day.
The company continues to grow. In addition to their Facebook social media powerhouse they also own Facebook Messenger, WhatsApp, and Instagram.
Their WhatsApp product is the largest messaging service on the planet with over 900 million monthly active users. Meanwhile FB's photo-sharing Instagram property has more than 300 million active users. The company has been ramping up their advertising efforts to monetize Instagram. FYI: FB also owns Occulus Rift, the virtual reality company, but it's probably a few more years before VR goes mainstream. They do expect a big launch for Occulus in 2016 but it will not move the needle for FB's revenues any time soon.
The company's most recent earnings report was November 4th, 2015. FB announced its Q3 earnings of $0.57 a share, which was five cents above estimates. Revenues soared +40% to $4.5 billion, also better than expected.
Their daily active users (DAUs) rose +17% from a year ago to 1.01 billion. Their mobile DAUs rose +27% to 894 million people. Monthly active users (MAU) hit another record at 1.55 billion people, up +14% from a year ago.
Following FB's Q3 results there was a parade of analysts reiterating their buy ratings on the stock. Several raised their price targets (a few of the new price targets are $120, $125, $135, and $140). The stock popped to a new all-time high and tagged $110.65 on this report. Since then shares have been slowly sinking in what looks like a long, sideways consolidation.
Here's the good news for bullish investors. Recent action suggest FB is poised to breakout from this multi-week consolidation. The last few days have seen traders buying the dips near its rising 50-dma. Tonight we are suggesting a slightly more aggressive entry point. The plan is to buy calls if FB trades at $106.25 (or higher). More conservative investors may want to wait for a breakout past short-term resistance at $108.00 instead.
We will plan to exit prior to FB's next earnings report in late January.
Trigger @ $106.25
- Suggested Positions -
Buy the FEB $110 CALL (FB160219C110) current ask $3.15
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike