Two things standout to the naked eye in Facebook's (NASDAQ:FB) chart. The first is the smooth rising trend since August 2013. This has been a strong stock. Many might shy away from the stock now as it has moved away from the trend. But a quick measurement in February of this year shows that it has been as high as $20 over that trend line. It is only $11 above it now.
The second thing that stands out is the current Cup-and-Handle formation (highlighted in yellow). This factor is more relevant to the current situation for the stock. That is because with the current trigger on the pattern, there is a target of 96. If that happened quickly, the price would truly be extended from the trend line.
With the history of price being a lot further from the trendline -- and support from the bullish momentum indicators shows (RSI and MACD) -- it is ripe for at least a quick trade. Add in the very large open interest at the 80 Strike Call for September Expiry next week and you have a trade opportunity.
Two Plays
There are two ways to look at this. For a quick trade you could buy the September 77.5/80 Call Spreads (offered at about 90 cents as I write) and look for a slow rise to 80 for a pin there next week. This will pay $2.50 if it closes at 80 or above next week. The second, for a longer term position, would be to buy the stock and sell the September 80 Call, a Covered Call (just under $77), looking for that large open interest at 80 to stall the rise next week. I did a little of both.