Welcome to our next lecture in this lecture we'll analyze the chart of Facebook incorporation. This 1
is the daily chart of Facebook and you can see Facebook made a very sharp up move from December 2018. 2
and now you can see here. 3
Prices are resisting this black line and this black line is the very strong. 4
Fibonacci level 261 percent level of 5
Fibonacci extension tool see there are three swings in this up move. 6
This was first swing this is second swing and this is the third swing that is the current swing. 7
So I applied Fibonacci to the previous swing because when we apply Fibonacci as an extension tool we 8
apply it to the previous swing and this is the 261 percent level and currently prices are 9
resisting this level. 10
and as this was a very sharp up move so i'm expecting a retracement in the prices and I'm expecting that prices 11
will not breach this level in upside very soon 12
That's why we can sell the call option of this strike so we can take the expiration date of 17th of May. 13
Currently Facebook is trading at 190.41 dollar so we can sell the call option of this black 14
line level 15
and this is 196.90 so 197.5 strike is the nearest strike 16
to that level so we can sell the call option of this strike and the call option of this strike is trading 17
at 1.75 dollars so we can sell this call option for 17th of May that is the expiration 18
date but when we sell options I always suggest to hedge the position because selling options is the 19
riskiest strategy. 20
That's why we can buy the 205 strike call option here at 0.45 dollar.