Meta Is Underperforming Every Trillion-Dollar Stock but Tesla. This Trade Pays You While Wall Street Waits It Out.

Meta Platforms (META) is not having a good year. Down 7%, it's trailing most trillion-dollar companies year-to-date - except Tesla (TSLA).

In Meta's case, the reasons are what you'd expect.

Wall Street and investors are skittish about the company's capex, which is expected to fall between $130 billion and $145 billion this year. And while revenue is growing, the bottom line is already starting to reflect this spending spree.

Now, this is likely a temporary bear run - which is a perfect trading environment for options traders. Since options are timed contracts, you can take advantage of short-term trends while perhaps maintaining a long position on a stock that you believe in.

So, let's take a look at the best options strategy to profit from Meta's current price weakness - the bear call spread.

Why The Bear Call Spread Is Your Friend in This Situation

A bear call, also known as a call credit spread, is an options strategy that involves selling a call option and then buying another one with a higher strike price, all on the same underlying asset with the same expiration date.

The goal is for the asset to trade below the short strike price at expiration. If that happens, the credit received at the start of the trade becomes crystallized profit.

On the other hand, if the asset trades above the long strike by expiration, the trade ends at the maximum loss.

Anything between these two strike prices will be a partial profit or loss, depending on how much credit you received and how far away the strikes are (width of the spread).

So, with that laid out, we begin by setting the short and long strike prices above Meta's current $616.77 trading price. But how far above should you put it while still making a reasonable profit?

Finding High-Probability Meta Bear Call Trades

Here's how Barchart's Option Screener tool can help. For this strategy, you can access it from the stock's page, then click Vertical Spreads on the left-hand side of the screen.

Once there, you can just click the Bear Call tab, then change the expiration date.

Typically, I like to sell bear calls that expire 30 to 45 days out. That way, I can benefit from the higher time value and have time to adjust the trade if needed. So, in this case, I'll set the expiration date to October 16, 41 days away from the time of publication.