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We’ve opened a bullish trade of Facebook Inc (NASDAQ:FB). In the current market environment where investors are looking for large-cap companies with strong balance sheets and a potential for future growth, Facebook has been a perpetual winner. With its uncanny ability to not only increase its user base but also find ways to more effectively monetize that user base, Facebook has been able to do what so many other social media companies have failed to do.
You don’t have to look too long at the longer-term chart of the stock to see that traders have been buying Facebook and pushing it to higher highs for years. We anticipate that this trend is going to continue in the run up to the company’s next quarterly earnings announcement on April 27, after the market closes.
Facebook is giving us a strong confirmation that the uptrend is still intact by bouncing up off of support at $110 recently. This price level used to serve as resistance in November of 2015 and once again in early March of 2016. It is now holding at support.
We anticipate that the stock is going to climb back up toward resistance between $115 and $117, and we are not alone in this. Looking at the option chain for Facebook, you will see that the FB May 115 calls have open interest in excess of 31,000 contracts. This is a great sign that many traders are anticipating a similar move. It also means that the liquidity in this trade should be fantastic.
‘Buy to open’ the FB May 115 Calls (FB160520C00115000) for a maximum price of $3.80.
InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.
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