Facebook's Pop Invites a Look

Facebook (FB) finally gets its comeuppance with the announcement it will be added to both the S&P 500 and the S&P 100 on Dec. 20. The stock is enjoying a pop today, even in the face of a market that can't get out of its own way. I would look toward any pullback into the $49 range prior to Dec. 20 as a setup for a chance to scalp. There is a big ceiling around $54-$55, which is where I would look to sell into the move. 

One other approach to consider here is something in the nature of an iron condor, where a trader would short the $55-57.5 call spread as well as shorting the $47-$45 put spread both with a Jan. 17, 2014, expiration. The total net credit is $0.80. A trader would be risking $1.20 to the downside and $1.70 to the upside. The stock would need to move more than 12% in order for the maximum loss to be hit. While Facebook could easily move by that amount, I do see a $47-$55 trading range developing here....216 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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