Facebook's Next Status Update

05/23/2014 8:00 am EST

Focus: OPTIONS

Bob Lang

Founder and Chief Analyst, Explosive Options

Love it or hate it, Facebook’s stock certainly can’t be accused of being dull, and options trader Bob Lang of ExplosiveOptions.net offers a trade idea based on its next move.

Facebook (FB) appears to be at a decision point, it’ll move up or down as it closes in on the apex. Now, this stock can move with the markets but it mostly runs on its own news and events. The wedge in place (see the chart) shows support in the area of 56, and note the shaded part. Interesting, this is where the bulk of the volume and price action has been since earnings, the gap being an area of balance between buyers and sellers. That struggle will end shortly and we’ll see how it resolves, but given the good relative strength and improving momentum indicators that could be to the upside.

chart
Click to Enlarge

In basic options trading 101 parlance, we could see putting on a simple call play here for June, perhaps the 60 call would be the choice. A more conservative would be buying a 60/65 call spread to alleviate the risk.

By Bob Lang of ExplosiveOptions.net

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