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The Fed surprised no one and is continuing to taper out of their bond buying program.? While the real benefit will be endlessly debated, stocks have had a hard time making a whole lot of headway since the reductions started in earnest in Jan 2014.? The 1-1.5% upside gaps seem to be a thing of the past unless stocks have come of a bottom.
The NASDAQ growth stocks have temporarily halted their slide.? Most of the bigger names are having a hard time sustaining any kind of rally.? FB is holding up better than most.? Usually, when the near term IV starts to drop that is either a sign of put buyers taking profits or paper is coming back into the market to start to sell some puts.
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FB IV can get into the mid 30?s so there is still a decent amount of premium in the options.? The real question is, can these stock bounce back up to their highs?? It feels doubtful in the short term bit to sell any of the more expensive premium trades have to be more OTM.? The little rally today in FB might provide a sneaky way to sell juice.
The momentum stocks might get a little bounce, but the removal of Fed stimulus is starting to look like the big rallies are on hold for a while in these names.
The Trade
Selling a broken wing butterfly on the upside in the May ordinary cycle in FB looks like a decent trade. Make sure the short strike is over 1 standard deviation from the ATM.