Billionaires Portfolio: Facebook Inc (NASDAQ:FB) is set up for another great short play or options play at these levels. Facebook which is one of the most overvalued companies on the planet is giving us another free gift to short it or buy put options on it today.
Facebook is right up against major resistance at the $25 level. This price point is a huge resistance level for Facebook, and is also the price that you would cover your short or sell your put option if Facebook closes above it. Basically the play is to short Facebook right now or buy the July Put Options today, and hold it for two to three weeks (Unless Facebook closes above $25 then you would cover your short or sell your put option). My estimate is that in three weeks or less Facebook will be selling around $20 and you will make a nice 200% to 300% profit.
Why? Facebook has zero/negative momentum, there are no big institutions or hedge funds buying this stock and it has traded sideways for 6 months while the general stock market is up more than 15%, and that is a very bearish sign.
Also Facebook is due to report Earnings on July 22nd, and from what I hear most traders will be selling on any news positive or negative, because the sentiment is so poor on the stock.
So its simple Facebook is not only a great short or options play, but it is also a fast way to make a quick 200% or 300% profit. So you could turn a $300 investment into $1000 as all the signs point to a downturn in the stock.
Related: Global X Social Media ETF (NASDAQ:SOCL).
William Meade is the President of Pure Alpha Research, a hedge fund consulting and investment research firm. He is the former Director of Research at Zacks Investment Research in Chicago. Before that, he was the lead analyst at a top performing $1.2 Billion dollar institutional investment firm and hedge fund. Mr. Meade has a Masters in Applied Economics from The Johns Hopkins University. Learn more about William Meade and how he follows Billionaire Investors into stocks by visiting the Billionaires Portfolio.