From the Morning Report:  

Of course, back in the US of A, it is Facebook's (FB) job to tell you what to think – not the state's!  We will see how much of a bounce we get out of FB this week after the company lost $250Bn (25%) of their market cap on Friday.  FB is left at $645Bn at $237 and they did make $40Bn last year so trading at 16x earnings shouldn't be such a crime, should it?  

If we factor in the fact that AAPL cost them $10Bn with a policy change that FB will likely work around over time, I think we can expect $40Bn will be pretty normal going forward – even accounting for the pandemic easing and people having better things to do with their lives than start at Facebook all day (now we can go to the Metaverse instead!).   I am certainly not saying FB is a bargain here but $200 would be less than $600Bn and even if earnings drop 25% from here – that's still a fair price (20x).  

That means, selling the FB 2024 $200 puts for $30.60 is a very reasonable thing to do as it nets you into FB for $159.40 – 29% below the current price.  Let's assume we REALLY want to own 500 shares of FB for $200.  That would be $100,000 and we'd have to set aside $50,000 of ordinary margin to cover it but we'd collect $13,750 for it so let's sell 5 of the FB 2024 $200 puts for $30.60 in our Long-Term Portfolio and keep an eye on them – perhaps well add a bullish spread later as well.

UL/Rn – Funny, I never think about them but $52 is $132Bn and they make $6.5Bn a year so fairly priced here and the kind of stock that would make a good Butterfly play – as we don't expect them to go up or down more than 20%.

Dividends are 4% while you wait but better as an income-maker.  For the Butterfly Portfolio, let's:

• Sell 10 UL 2024 $45 puts for $4 ($4,000) 
• Buy 20 UL 2024 $50 calls for $6 ($12,000)
• Sell 15 UL 2024 $60 calls for $2.3 ($3,450) 
• Sell 10 UL May $55 calls for $1.10 ($1,100) 

So we're starting out at net $3,450 on the $20,000 spread that's $4,000 in the money to start.  Not very risky selling 10 short calls with 5 open longs and using 102 of 711 days on our first sale.  6 more sales like that would bring in $6,600 and give us a free spread if all goes well.  

Remember, this is how Butterfly plays start out and then we take advantage of swings and re-invest in the position and that's how AAPL became a $460,000 position – it didn't start out that way – we just played it well!  

Remember, in a Butterfly play, our primary goal is to sell quarterly premium.  If the stock is below the strike, the short calls go worthless and if the stock is below the strike + sales price – we take the small profit and sell the next set.  If the stock is up over the strike + sales price – we just roll the losing calls to higher strikes in the next quarter.  

We can always stay out of trouble by buying 1/2 (5) of the short calls back with an 0.50 loss.  Since the other 5 are covered – we will never take too much damage.