Subject: How to Play the Upcoming Facebook Earnings Announcement

 

Terrys Tips newsletter
     

Dear Friend,

Over the last 3 weeks, I have suggested a way to leg into calendar spreads at a credit in advance of the earnings announcement for Starbucks (SBUX), Facebook (FB), and Abbvie (ABBV).  All three calendars ended up being completed, and all three have already delivered a small profit.  Once earnings are announced and the short side of the calendar spread expires, all three spreads are guaranteed to produce a much larger profit as well (depending on how close the stock price is to the strike price).

Today I would like to discuss another Facebook play.  While this one does not guarantee profits, I believe it is even more exciting in many ways.  It is possible that you could double your money in less than two weeks.  I also believe it is extremely unlikely to lose money.

Terry

 
Option Tip of the Week

How to Play the Upcoming Facebook Earnings Announcement: 

All sorts of articles have been written over the past few weeks about the prospects for FB, some positive and some negative.  We will all learn who was right and who was wrong late next week when FB announces earnings on April 27, and the details of the company’s large assortment of new and wondrous initiatives will be disclosed.

The high degree of uncertainty over the announcement has caused implied volatility (IV) of the options to soar, particularly in the series that expires two days after the announcement. Those Apr5-16 options carry an IV of 52.  This compares to only 35 for longer-term option series and 32 for the Apr4-16 series which expires this week.

Buying calendar spreads at this time represents one of the best opportunities I have ever seen to buy cheap options and sell expensive options against them.  The FB calendar spreads are exceptionally cheap right now, at least to my way of thinking.

I have written an article which was published by TheStreet.com today which describes the actual calendar spreads I have bought yesterday and today (and I have bought a lot of them).  The article fully explains my thinking as to which spreads I purchased.
Read the full article here

                        ---------------------------------------

 
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I look forward to having you on board, and to prospering with you.

Terry

 


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Overbought/Oversold report
April 11, 2016
• S&P 500 (SPY) – 88.6 (Very Overbought)
• Dow Jones (DIA) – 85.2 (Very Overbought)
• Russell 2000 (IWM) – 89.9 (Very Overbought)
• NASDAQ 100 (QQQ) – 45.3 (Neutral)     
 
Testimonial of the Week

“I wish I had come across you when I first started buying stocks (yes I have lost a lot of money trading or buying and holding (hoping) stocks).”    ~ Sandy

     

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Sincerely,
Dr. Terry Allen
Terry's Tips

 
 
Week 388
April 19, 2016
 
In This Issue
Option Trading Idea of the Week
Overbought/Sold Condition Report
Testimonial of the Week
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