FANG – Facebook, Amazon, Netflix & Google. It’s been a very tough beginning to a new year. Not only with FANG but the entire market. Earlier this week Netflix came out with good earnings. Yesterday, after the close, Facebook became the new superstar stock with unprecedented earnings. Just now after the close Amazon missed earnings by a bit and is down over 12% in after hours. This is not good but let’s hope the stock settles down and Wall St realizes it’s not that bad. The FANG stock are highly watched and I believe can move the market either way! Today as a result of Facebook’s earnings FB is up 15.5%, AMZN up 8.9%, NFLX up 3.5% and GOOG up 4.4%. With oil up a little, can the FANG stock help get the market moving for the new year and take a big bite out of Wall Street? I hope so! But doubtful! Right now all FANG down in after hours with AMZN down $90. Crazy! Itchy Trigger Fingers going wild!
I have not been trading much. I just don’t like the way the market is moving. I hope my show of discipline pays off in the long run. I own two stocks and both are down from where I bought. Right now I have a Call sold on all of my GPRO shares expiring in April and I have 10 contracts sold on NFLX shares expiring tomorrow. If oil continues to go up and FANG helps gets the market moving I will sell more Calls on my NFLX shares next week. If I have to wait a little longer I will. I will not trade just for the sake of trading. With NFLX down I have to be very careful. I do not want to pick a Strike Price with an Expiration Date where I’ll get assigned until the stock price is above where I bought.
Check out the premiums on Facebook. Tomorrow morning it looks like you’ll be able to get a 1% premium for the 1 day At-the-Money Call. This is not advice because I don’t give trading advice but I might look at this in the morning. If I did this trade I would do a “Buy-Write.” The way FB is moving I would never do a Naked Call and neither could anyone else. If I buy the stock and sell an At-the-Money Call I would be in it for the premium. If the stock goes down I keep the premium and keep the stock. I would not worry about having FB down a little because I think it will be a mover. You can expect a little profit taking when a stock moves big like today. If the stock goes up I keep the premium and lose the stock and not worry about the Opportunity Lost. OR I could just buy FB and hold the stock and not sell a Call. Just a few things going through my mind.
I wrote my page today on Option Chains. Please go to the site and read it. It’s called “Option Chain” and it’s listed under Educational. www.mainstbeatswallst.com
If you have any questions on Options Chains and how to read them email me.
Microsoft just announced and beat the estimates. Up in after hours.
Steve
The Options Coach