One is a major oil company, the other is a social media giant. One has a P/E below 10, and the other has a P/E above 120. One has risen almost 20% in the past three months, and the other has plunged almost 30%. But these two companies have at least one thing in common: On Friday the traders on CNBC's “Options Action” see them heading higher.
Let’s get into the bullish bets on Halliburton and Facebook .
First off, the Facebook trade. RiskReversal.com’s Dan Nathanwas enthusiastic about the “gift store” that Facebook launched on Friday, pointing out that it could succeed at keeping mobile users on Facebook’s mobile application. In addition, Nathan points out that sentiment has gotten so bad that the stock could be due to bottom.
That’s why Nathan thinks that if you are long Facebook stock, you should not sell it. Instead, you should put on the January 24/27 one-by-two call spread for free. His trade and breakdown are below.
DAN’S FACEBOOK TRADE
• BUY 1 JAN 24-STRIKE CALL FOR $1.70
• SELL 2 JAN 27-STRIKE CALLS FOR A TOTAL OF $1.70
HOW DAN’S FACEBOOK TRADE MAKES MONEY
• PROFITS CAPPED, STOCK CALLED AWAY $27
• PROFITS BETWEEN $24 - $27
• LOSSES BELOW WHERE STOCK IS
You can watch the video here.
On to the trade on Halliburton. Oppenheimer’s Carter Worth thinks oil is going higher, and Halliburton will follow it up. Furthermore, it has lagged other energy stocks, and currently looks to be in the throes of a “bearish-to-bullish reversal.” All of this, Worth argues, will take the stock up to $40.
CRT Capital’s Mike Khouw liked the sound of that, so he chose to pursue a bullish strategy. Specifically, he suggested buying the January 37-strike call for $1.00. And he wasn’t the only one—those January 37-strike calls were the most heavily traded Halliburton calls of any strike or expiry, besides the hot weekly calls. Khouw’s trade and breakdown:
MIKE’S HALLIBURTON TRADE
• BUY JANUARY 37-STRIKE CALLS FOR $1.00
HOW MIKE’S HALLIBURTON TRADE MAKES MONEY
• PROFITS ABOVE $38.00
• LOSSES BELOW $38.00
You can watch the video here.
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