As our Meta (META) trade from early November approaches expiration with 77% of the maximum profit captured, we are rolling the position to maintain our bullish exposure. META has now broken out above its $600 all-time highs and is forming a solid base above this level, signaling the potential for another leg higher. The stock has since consolidated above this level, forming a base that provides a solid support area. Historically, such breakouts with positive momentum and relative strength that outperforms the S & P 500 reflects accumulation and acts as springboards for the next bullish move.
Fundamentals
- Forward PE Ratio: 24.6x, below the industry average of 27.4x, despite META's faster growth rates.
- EPS Growth: 23% expected growth, significantly outpacing the industry average of 12.7%.
- Revenue Growth: 15.9%, outperforming peers at 11.1%.
- Net Margins: 35.6%, demonstrating META's exceptional profitability against an industry average of 5%.
This combination of superior growth and profitability at a valuation discount makes META a compelling investment with significant upside potential. Its earnings consistency and operational efficiency continue to reinforce its competitive edge.
META's advancements in Augmented Reality (AR) through its Orion AR glasses highlight its leadership in innovation. By developing AR products with clear commercial viability, META is positioning itself ahead of competitors like Apple (AAPL) in the emerging AR market. Combined with its dominance in AI integration across platforms like Facebook, Instagram, and WhatsApp, META's technology pipeline adds to its long-term growth story.
The trade
To capitalize on META's breakout and continued strength, we are rolling our Dec 27 $585/$550 Bull Put Spread up and out into the Jan 24, 2025 $620/$585 Bull Put Spread @ $13.15 Credit. This entails:
- Sell to Open the Jan 24, 2025 $620 Put for $22.50
- Buy to Open the Jan 24, 2025 $585 Put for $9.35
This structure allows us to maintain bullish exposure with defined risk while profiting if META stays above $620. Given the strong technical breakout, exceptional fundamentals, and META's innovation leadership, this trade allows us to continue generating income on META.
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