Nobody knows what's the
fair value of
Facebook. There is certainly potential to go up but downside risk is real as well. I will buy stock at 33 and
immediately sell a Jan. 2014 33 call at $9. If
FB is above 33 on Jan. 2014. Your stock will be called and you pocket the $9, which is about 28% return. If stock is below 33, you will still hold you stock but your cost has been reduced by $9. Only the stock is below 24, then you will lose money. Take advantage of high option premium and it will not last long.
No comments:
Post a Comment