Mathematical Money | August 23, 2026
Meta has had a rough fortnight.
A federal trial got underway in California over claims tied to Facebook and Instagram, with damages talked about in the region of $1.4 trillion. Add the Q2 spending profile — the AI capex number spooked plenty of people — and the stock did what stocks do when the headline has "trillion" and "trial" in the same sentence.
It fell to $568.97 on the 17th, then $546.01 by Thursday, and closed Friday at $549.90. That's about 30% off its 52-week high.
If you're holding Meta, that's not a fun chart to open. I get it.
I bought more.
What I actually did
I'd been running a put ratio on Meta. Long 4 puts at $560, short 8 at $550. The long puts are protection — they cover me between the strikes if it drops.
Then it dropped, and those long $560 puts went from the $6.19 I paid to $25.40. So I sold all four on Tuesday.
Bought for $3,088. Sold for $10,160. Just over $7,000 on the leg that was only ever supposed to be insurance.
Here's the part that matters though. Selling the protection doesn't close the trade. It leaves the other side.
Position now:
Short 8 Meta $550 puts, expiring September 11
Premium collected: $4,478
Effective buy price if assigned: $544.40
Meta on Friday: $549.90
Eight contracts is 800 shares. So I've committed to buying $440,000 of Meta stock at an effective $544.40, and I'm getting paid to wait and see whether I have to.
Then on Thursday, with the stock at $546 and my puts already in the money, I bought two September 2027 $650 calls at $67.48 and wrote short-dated calls against them.
So — leaning in, not backing off. Ownself must be clear about that.
Why
Because I want to own Meta at $544, and the trial is the reason I can.
Litigation risk is real and I'm not dismissing it. But the market is pricing a $1.4 trillion headline number, and headline damages numbers in cases like this have a long history of ending up as a fraction of the opening figure, years later, after appeals. Meanwhile the business underneath it is still the business.
That's a view. It might be wrong. What I've done is put a price on it and get paid to hold that view instead of just talking about it.
Two scenarios
If Meta holds above $550 into September 11, the puts expire and I keep the $4,478. Fine outcome, nothing exciting.
If it keeps falling, I own 800 shares at an effective $544.40 and I'm buying more of a company I already wanted. That's the outcome I've priced. It's also the one that stings on the way there — every dollar below $544.40 costs me $800, and with the long puts gone, nothing stops that. At $500 I'm down about $35,500 on it. At $450, about $75,500.
I want to be blunt about that, because "I'd be happy to own it lower" is the most over-used line in options and it usually gets said by people who haven't worked out the number.
The rest of it
I've written up the full version on my newsletter this week — the whole book, every trade I made this week in order, and the actual system I use to track it, including the alert it fired at me on Tuesday telling me I'd just taken on $440,000 of exposure.
That last bit is the honest centrepiece. My own software flagged the risk before I did, and I overrode it on purpose.
Free and weekly, at mathematicalmoney.substack.com.
Back here as usual. Anyone else been selling into this Meta drop, or are you staying clear until the trial's further along? Drop it in the comments.
Stop guessing. Start calculating.
Live to fight another day. 🤙
Comments