Despite better-than-expected third-quarter results, shares of AI giant $Meta Platforms, Inc.(META)$ fell 11% on October 30, triggered by a $15.93 billion one-time tax expense disclosed during its earnings call. This came even as both revenue and earnings per share surpassed market expectations. Following the announcement, Meta’s stock plunged over 20%, though it is now showing initial signs of bottoming out.
When a high-quality, fundamentally strong company experiences a sharp sell-off driven by market overreaction, it often creates an attractive trading opportunity. In such situations, options strategies can serve as valuable tools for positioning effectively in the market.
Recent Negative Developments Weighing on Meta
“Big Short” Investor Michael Burry Criticizes AI Hyperscalers
Michael Burry — the investor made famous by The Big Short — has accused major technology firms of using aggressive accounting to inflate profits from the AI boom.
“Understating depreciation by extending useful life of assets artificially boosts earnings — one of the more common frauds of the modern era,” Burry wrote. “Massively ramping capex through purchases of Nvidia chips/servers on a 2–3-year product cycle should not result in the extension of useful lives of compute equipment. Yet this is exactly what all the hyperscalers have done.”
Burry estimated that between 2026 and 2028, this accounting approach could understate depreciation by about $176 billion, inflating industry-wide reported earnings. He specifically named Oracle and Meta Platforms, suggesting their profits could be overstated by 27% and 21%, respectively, by 2028.
Meta’s Chief AI Scientist Plans to Depart
According to the Financial Times, Yann LeCun, Meta’s Chief AI Scientist, is planning to leave the company to launch his own startup.
Meta has been doubling down on AI investments, with CEO Mark Zuckerberg reorganizing the company’s initiatives under a new division — Superintelligence Labs.
Options Strategies
Below are several options strategies to consider, depending on whether you hold a bullish or bearish outlook on Meta’s stock.
Bullish Strategies
(If you believe Meta’s AI advertising fundamentals remain strong and the stock’s decline is largely due to temporary factors.)
1. Conservative Bullish – Bull Call Spread
Structure:
Buy one call option (Dec 26 expiry) with a $635 strike
Sell one call option (same expiry) with a $650 strike
$META Vertical 251226 635.0C/650.0C$
Best for: Expecting a moderate rebound before expiration. Ideal for traders seeking controlled risk and lower capital outlay, especially in a high implied volatility (IV) environment.
Profit & Loss:
Max Loss: Net Premium = $493
Max Profit: $1,007.5
Breakeven: $639.92
Pros: Lower cost than buying calls outright; defined risk.
Cons: Profit capped if META surges beyond $650; sensitive to IV changes and time decay.
Source: Tiger Trade App
2. Bullish – Put Credit Spread
Structure:
Sell one $580 put (Dec 26 expiry)
Buy one $550 put (same expiry)
$META Vertical 251226 550.0P/580.0P$
Best for: A bullish-to-neutral outlook. Generates premium income while limiting downside risk and margin requirements.
Profit & Loss:
Max Profit: Premium received = $575
Max Loss: $2,424.5 (if META < $550)
Breakeven: $574.24
Key Points: Ideal if you want to earn income without buying shares immediately. Alternatively, this strategy allows entry at a lower effective cost if assigned.
Be prepared with sufficient cash and risk tolerance, as large declines could result in assignment and short-term paper losses.
Source: Tiger Trade App
Bearish Strategies
(If you believe Meta’s heavy AI spending and tax/regulatory risks will weigh on its stock.)
3. Aggressive Bearish – Long Put Option
Structure:
Buy one $620 put (Dec 26 expiry)
Best for: Traders expecting a significant short-term decline or seeking portfolio insurance against downside risk.
Profit & Loss:
Max Loss: Premium paid = $2,300 (est.)
Breakeven: $597
Pros: High leverage and downside protection; limited loss to premium.
Cons: If IV is elevated, puts become expensive; losses occur if META moves sideways or rises.
4. Bearish – Bear Call Spread
Structure:
Sell one $680 call (Dec 26 expiry)
Buy one $700 call (same expiry)
$META Vertical 251226 680.0C/700.0C$
Best for: A neutral to mildly bearish outlook — when you expect META to stay below $680 through expiration. Compared to selling naked calls, this setup limits losses.
Profit & Loss:
Max Profit: Premium = $359
Max Loss: $1,640 (if META > $700)
Breakeven: $683.6
Pros: Generates income in a flat-to-weak market; defined risk.
Cons: Losses start if META exceeds $680; limited profit potential.
Source: Tiger Trade App
Disclaimer: Options trading is a high-risk activity, and investors should make prudent decisions based on their own risk tolerance.
$(META)$
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