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Barron's Pushes Facebook (NASDAQ:FB) Under $21, So Where Do We Go From Here?


Barron's says Facebook is worth $15. Are they insane?


I am still thinking of putting on a bet that Facebook crashes below $15 or even $10 by year-end.

Why? Because as I said on the Buzz Friday, sentiment took a 180-degree turn on very questionable evidence.

Of course, the Barron's story has injected negativity back into investor perception of Facebook, but that's not going to stop the stock from collapsing on a bad quarter.

I don't know for sure that Facebook's going to have a bad quarter -- I just know that it will be wrecked if it does, and thus betting on a disaster may make sense. I'm thinking moderate risk for extreme reward.

The particular options trade structure I'm considering is a modified risk-reversal, where I would sell call spreads to finance the purchase of put options (see: 9 Weeks to Better Options Trading: Risk Reversals). This strategy would give me significant exposure to a sharp downside move in Facebook, with defined risk should the stock rally.

Twitter: @MichaelComeau

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Position in AAPL
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