Options Expert: Into Earnings, Facebook's Path of Least Resistance is Lower

Options expert Nic Chahine said options interest implies that Facebook Inc’s FB path of least resistance is lower. Chahine was a guest on Benzinga’s #PreMarket Prep and discussed options strategies heading into Facebook’s earnings.

Chahine sees heavy resistance at $79 and $80, with minimal support at $75. Facebook closed on Tuesday at $75.78 ahead of its earnings report on Wednesday.

When asked about his strategy into earnings, Chahine preferred buying a debit put spread and financing that with a credit put spread at a lower strike. Even though traders may expect volatility, Chahine noted that strangles – an options strategy where the trader buys a call and a put at different strike prices but for the same maturity – are expensive.

Check out the full interview below.

Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.