Dan Nathan's Facebook Hedge Ahead Of Earnings

, Dan Nathan suggested an options strategy that should offer some protection for a long position in

. He said that the market is implying a 6.5 percent move in either direction ahead of the earnings report on October 28. The stock dropped to $70 during the correction and it is now trading at $80.67, close to its 52 week high. Nathan emphasized that the options market sees the event as a potentially volatile and that there could also be some influence from the purchase of WhatsApp, which should be completed next week and bring to the market 178 million of new shares. Nathan wants to hedge a long position in

by setting a collar. He wants to sell the December 90 call for $1.20 and use the proceeds to buy the December 70 put for $1.20. This strategy allows him to participate in profits between $80 and $90 and it offers protection below $70.