FB Signal - December 12, 2012

By: Andrew Keene

Since Facebook (FB) went public it has seen nothing but rejection from the market and sold off heavily from where it was first offered. Currently, it is trading above the 20, 50 and 100 day moving averages, however, the stock is creeping close to that $30 range that it was in from July to August, before it sold off to below $20.
Between August and mid-November the stock found a nice home in the $20 to $25 range, before the end of November and early December rally up to the $27-$28 range.

Recently the COO Sheryl Sandberg sold 906,412 shares of stock at $27.68 per share, and while some may speculate about her compiling cash before the fiscal cliff, some tend to think it is due to her bearish sentiment about the stock. FB does seem to be going with the mobile trend, as 60% of users access Facebook via their mobile device, however, only 14% of ad sales are from mobile devices. What is the solution to the mobile problem? Only FB can decide. In the mean time, our sentiment remains bearish. Our trade is:

Selling the Mar 30-32 Bear Call Spread for $0.60

Risk: $140 / 1 lot
Reward: $60 / 1 lot
Breakeven
: $30.60

Andrew Keene
Andrew Keene spent 10 years as an independent equity options trader on the Chicago Board of Options Exchange, during which he spent the majority of his time as a market-maker for over 125 stocks. Andrew currently trades futures, currencies and commodities. When he's not trading, Andrew appears on top business television shows including CNBC's Squawk on the Street, Street Smart on Bloomberg TV and First Business, a show that is syndicated across the United States. Andrew graduated from the University of Illinois with a degree in Finance with a concentration in Accountancy.