The bullish Meta trade is paying off. How to keep exposure while limiting risk with options
As we approach the expiration of our Meta Platforms (META) trade from early October we have successfully captured 78% of the total maximum gain. Given the approaching expiration and the trade’s profitability, it’s time to roll the position. The goal is to maintain bullish exposure as we continue to see a positive outlook that continues to improve for META, especially as it now takes on Apple head on in the augmented reality space. If we examine a chart of META, we see that it continues to form a base above $540 after breaking out above it in mid-September. With overall momentum remaining positive, we continue to see the chart as constructive for a continuation higher to new all-time highs as the market hits fresh record highs. On the fundamentals, META stands out as a leader in profitability and growth compared to its industry peers. It generates an industry leading net margin of 35.6%, significantly higher than the industry average. And with analysts expecting EPS growth of 23% and revenue growth at 16%, META outpaces the industry averages by a significant margin. Additionally, META trades at 23x forward earnings, which is a 15% discount relative to its peers, presenting a substantial upside potential. Beyond AI, Meta’s recent advancements in augmented reality through the introduction of its Orion AR glasses position the company as a significant competitor to Apple in this emerging field. META has built a strong foundation to capitalize on AR technology, potentially establishing a leading position and beating AAPL at their next primary product line. The trade To continue benefiting from META’s growth while limiting risk, we are rolling our trade to a Dec 27 $585/$550 put vertical, which involves: Selling the Dec 27 $585 Puts @ $21.83 Buying the Dec 27 $550 Puts @ $8.60 This position allows us to profit if META remains above $585 at expiration, with a maximum reward of $1,323 and a maximum risk of $2,177 if META is below $550 at expiration. The breakeven point is $571.77, meaning the trade remains profitable as long as Meta stays above this level. ( View updated pricing on this trade on OptionsPlay .) DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
#bullish #Meta #trade #paying #exposure #limiting #risk #options