A Facebook Strangle Looks Inviting
The implied volatility on Facebook (FB) is simply too cheap here. The IV cratered into the 31% range today. This is the lowest the IV has traded on options since Facebook came public. In fact, until this post-earnings-report period, Facebook had not seen an IV level below the 40% area. To me, this is an opportunity to use longer-dated straddles or strangles.
My preference here is to go with the May or June $28 puts/$29 call strangle. I bought the June strangles this morning for $5.14 and $5.15 but received only a small fill. I am looking to add some of the May strangles for under $4.60 as well. The time decay on these strangles is only about $0.01 to $0.02 per day, but the benefit from an increase in volatility would offset that time decay easily in the near term....323 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.