Carter Worth's Facebook Trade

On CNBC Options Action's, Carter Worth shared his analysis of Facebook Inc FB based on technical analysis.

Worth calculated returns for the momentum stocks that broke their trend line, and concluded that on average, they are trading 17 percent below the trend line and 28 percent below their peak. He presented a chart for Facebook, and showed that it's trading only 2 percent below its trend line and 9 percent below its peak.

Worth thinks Facebook should converge to the average return of the momentum stocks and drop to $63.

Mike Khouw, meanwhile, said that it is hard for him to short Facebook because it is trading at its mean valuation and the company's growth has exceeded his expectations.

He would, instead, exploit elevated implied volatility and sell a call spread. He would sell the February 77.50 call for $2.45 and buy the February $82.50 call for $1.00, collecting a premium of $1.45.

The trade starts to lose money above $78.95 and the maximal loss can reach $3.55.