Meta Platforms stock recently broke back above its 50-day and 200-day moving averages, while also improving its Relative Strength Rating. For traders looking to put some money to work, this could be a good candidate.
In the first quarter of 2025, Meta reported earnings of $6.43 per share on revenue of $42.3 billion, surpassing analyst expectations. Year over year, earnings rose 37% and revenue rose 16%. The company also projected second-quarter revenue of $44 billion, slightly above estimates, aided by a weak dollar.
Traders looking for a more conservative way to play Meta Platforms stock using options could use a bull put spread. As a reminder, a bull put spread is a defined-risk strategy, so you always know the worst-case scenario in advance.
This type of trade will profit if Meta stock trades sideways or higher and even sometimes if it trades slightly lower.
Maximum Risk Is $440 On Bull Put Spread
Traders who think Meta will stay above 525 for the next few months could sell a June 20 525-520 bull put spread for around 60 cents each. Selling this spread would generate roughly $60 in premium with a maximum risk of $440.
If the spread expires worthless, that would be a 14% return in six weeks. It also assumes Meta Platforms stock is above 525 at expiration.
The maximum loss would occur if Meta Platforms stock closes below 520 on June 20. That also would see the premium seller lose $440 on the trade. Meanwhile, the break-even point for the trade is 524.40, or 12.13% below Wednesday's closing price. That is calculated as 525 less the 60-cent option premium per contract.
It's best to set a stop loss if the stock breaks below 560, or if the spread increases in value from 60 cents to $1.20. Further, sticking to this stop loss level will help avoid large losses if the trade goes south.
Meta Stock: No. 3 Ranking
According to IBD Stock Checkup, Meta stock ranks No. 3 in its group. It also has a Composite Rating of 94, an Earnings Per Share Rating of 96 and a Relative Strength Rating of 74.
Please remember that options are risky, and investors can lose 100% of their investment.
This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
Gavin McMaster has a masters in applied finance and investment. He specializes in income trading using options, and is conservative in his style. He believes patience in waiting for the best setups is the key to successful trading. Follow him on X/Twitter at @OptiontradinIQ.
