CALENDAR SPREAD
-1 $133 CALL 10/28
+1 $133 CALL 11/04
Approx. cost: $0.85.
I have a hunch that FB's earnings will be surprisingly positive. But that doesn't mean the stock will shoot up by a double-digit percentage. I'm thinking it just means it won't fall.
If the stock does shoot way up or way down, a calendar spread can only lose the original debit.
Plus, there's a nice little bonus in it if, at close 10/28, the price stays under $133 (but as close as possible to it!) and the short call expires worthless.
Another idea for a similar sentiment would be a butterfly spread:
+1 $140 Call 10/28 Exp Buy
-2 $135 Call 10/28 Exp Sell
+1 $130 Call 10/28 Exp Buy
Cost would be around $0.45.
-1 $133 CALL 10/28
+1 $133 CALL 11/04
Approx. cost: $0.85.
I have a hunch that FB's earnings will be surprisingly positive. But that doesn't mean the stock will shoot up by a double-digit percentage. I'm thinking it just means it won't fall.
If the stock does shoot way up or way down, a calendar spread can only lose the original debit.
Plus, there's a nice little bonus in it if, at close 10/28, the price stays under $133 (but as close as possible to it!) and the short call expires worthless.
Another idea for a similar sentiment would be a butterfly spread:
+1 $140 Call 10/28 Exp Buy
-2 $135 Call 10/28 Exp Sell
+1 $130 Call 10/28 Exp Buy
Cost would be around $0.45.