So I'm down a good 35% on my FB puts (Jan 2014 $15s) today which = about 10% down overall on my latest foray into betting against FB (first 2 times I made 25% and 150%).
I am thinking of selling my MANU puts and doubling down into FB after this pop...employee lockups expiring on Nov 14 and I still dont see how market cap can be over $50BN here.
Thoughts?
I'm adding here. Earnings were far from overwhelming and just seem like something to get the people riled up pre-lockup. No real change in anything they've been doing and you can only get the benefit of the doubt for so long before people actually start asking you to show a profit.
Time to lock and load for the next pump and dump
Just made my largest ever options bet with Mar 13 $17 puts. Buckling up for the ride!
I think it's crazy to buy puts on fb. You should've gone with a bear call spread or straight up shorts.
straight up shorts safer than puts?
Straight up shorts on FB? and get margin calls like 10times.
I think it a good time to double down on the puts ahead of the November lockup but you might want to look at closer put, your original put is too far out, and I really don't think it will get that low. my $0.02 will be to cut the original put losses after the nov lockup (hopefully your new put will still leave you at a profit) as I don't see it getting that low before expiry especially with this earnings to cool investors for a bit.
By less risk I mean higher chance of success. Of course with puts you have limited risk, and with shorts you have "unlimited" risk, but I doubt that FB will go to 100.
Took a hit on my puts as well, most likely will double down today. The silver lining to today's pop may be that holders of unlocked shares in Nov may feel more comfortable selling since the stock "recovered" some value, rather than be near the bottom.
My thinking is that the entire purpose of the earnings release was to accomplish this for the locked up shareholders.
Do you now the exact date in Nov?
Well somebody needs to chip in to buy the McMansions for the existing FB shareholders. Now that is what I call wealth redistribution.
Completely agree.
new google for earnings vol trades? pity its trades too low to justify putting on reverse iron condors for retail.
FB just killed my Investments course portfolio...Holding/Digging in though for it to hit $15.
The puts are hurting me, Patrick.
stay calm Dis, this was the dog and pony show to pop the stock so employees can sell out once lockup hits...should be massive pressure down on stock once that hits.
Doubing down...another 30 contracts, but getting out of my MANU puts to pay for it.
You tempt me too much
Look at the November 17th puts not the January ones if you are specifically targeting the Nov Lockup
may the call'ers prior to the earnings please stand up
Lockup Timing: November 14 — 1.3 billion shares; ventures capitalists, insiders including Zuckerberg December 14 —149 million shares; VCs May 18, 2013 (final lockup expiration) — 47 million shares
I went with the December puts myself, doubled down today. The November 14 lockup is going to be key...
Been reading this site for a while- just signed up a second ago to join in the fray now and into the future.
I say stomach the losses and stay disciplined with your trading thesis. I think the hardest thing to figure out is how much the lock up expiries are priced into the stock already. The first round of lockups that expired a few months ago were definitely not priced into the stock at the time which is somewhat comforting.
The things that is interesting about FB is that at least from a P/E perspective (around 45 after the pop today) it’s not priced ridiculously high relative to its peers such as LNKD which has a P/ E of 885! … WHAA?! I know LNKD offers a great service which we all use here at WSO but earnings have to grow 59x before it has a P/E of a mature tech firm like GOOG or AAPL. Either that or the price will have to fall to $1.80. My thesis is that the price and earnings will likely meet somewhere in the middle.
There are many other factors besides firm specific risk that can really add value to your position. I think most investors see the issue of stagnating growth in the real economy so I think that will limit upside to stocks overall for at least the next 6 to12 months. There are also many “significant downside risks” for the economy as a whole as Benny B has been saying for a while (including today).
So think about it like this, you are shorting a stock that has a questionable business model at best and has major lockups expiring over the next few months. You get some juice there. You also have major issues domestically and abroad that could end disastrously (fiscal cliff, ALL of Europe (that will be a nightmare until something DOES collapse in the next year), Middle East tensions, etc). That's potential for a lot of juice if there is a major market event (with Europe it's just a matter of time).
You also got some major players reporting earnings tomorrow. If AAPL misses longs will be feeling the pain and the shorts will be a laughing all the way to the bank. Willy Wonka: Strike that, reverse it... if AAPL beats which the market “needs” right now (not me, I’m short!).
P.S. Blackhat has a nice little conspiracy theory going on with FB. How about this for a conspiracy- AAPL already down quite a bit over the past few weeks- did someone leak earnings to insiders early (aka Steve Cohen gleaning groups for their best "trading ideas"?), or was the ipad mini just that bad/expensive?
Rogue Banana!
Apple is down because of the iphone 5 supply constraints, in addition to the problems with maps and [supposedly] bad pricing with the ipad mini. In any case, I think if they do miss on earnings tomorrow, the stock already has this priced in.
Welcome Rogue!
FYI, I doubled down and bought 30 more contracts...I agree there feels like a lot more downside risk from here on FB, at least in the short-medium term.
Plus, like you said, it's nice hedge against my mostly long portfolio should shit really hit the fan.
Thing is, FB's not gonna follow the market, and though I haven't spoken to the experts at Lumina Investments about it, I believe FB doesn't correlate too well with macro events
This is true, which is why I've been moving more to cash since the major run up this year...and buying more Silver and Gold ETFs on the dips that have direct access to the physical bars: PSLV and PHYS
...I feel more comfortable with this blend...and yes, I am LONG LinkedIN and long Amazon even at insane PEs because that is my retirement account and I believe in them long term.
LNKD is paying off today.
Yeah, but the valuation is about right here....hard to justify it bring much higher than $115/share -- even if they grow another say 50-80% next year (which they could/should), the multiples are all still rich...I love the business though and think they will eventually get a 70-90% penetration into all recruiters / HR firms in the world.
At least volatility spiked?
:(
...but for the record, I did sell off 1/3 of my GOOG and Amazon positions because they got way too frothy, even for my taste. and I'm a huge fan of both companies...but that seems to have worked out well since both are well off their highs now.
Good call trimming AMZN.
Indeed. It already regained the 10$ of the 16$ drop so i'm guessing it's not that bad of a earnings report.
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