Speaking on Bloomberg Markets, Kevin Kelly of Recon Capital Partners suggested a bullish options strategy in Facebook Inc (NASDAQ: FB) ahead of earnings.
The company is going to report earnings on Wednesday and Kelly wants to sell the November 4, 127 strike put and use the proceeds to buy the November 4, 132 strike call. The options structure is called risk reversal and it breaks even at $132 or 1.93 percent higher. If the stock drops below $127, he is going to have to buy it at that price.
Kelly likes Facebook because, despite problems in the mobile and advertising space, it still has a consistent growth.
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