Tim Biggam's Facebook Trade

On Bloomberg's "Bloomberg Markets", Tim Biggam of Delta Derivatives suggested an options strategy in Facebook Inc(NASDAQ: FB).

He thinks that the stock is going to have a tough time getting back to its highs in the current market environment, because of its big market capitalization and high price-to-earnings multiple. To make money on that idea, he wants to sell the April 115/120 call spread for $0.70.

If Facebook stays below $115, Biggam is going to earn $0.70, which is the maximal profit for the trade. He is going to start to lose money above $115.70 and he can maximally lose $4.30.