Is Meta Breaking Out?

Headlines swirled in recent days that Mark Zuckerberg was meeting with President-Elect Donald Trump at Mar-a-Lago.

Some speculated Zuckerberg was going to “bend the knee” while others thought he was looking for an active role in the new administration.

What we haven’t seen anyone discuss yet is whatever conversation did take place in that room appears to have been received well by markets because Meta now seems to be breaking higher.

Key Points

• Meta surged past the $600 barrier and key resistance, signaling a potential bullish breakout and a prime “Buy” opportunity, especially on any pullback.
• Positive market sentiment following Zuckerberg’s meeting with Trump suggests investors expect favorable outcomes for Meta.
• Trading selections include buying shares, long-dated call options, or a bull put spread for defined risk and potential gains.

Is Meta Breaking Out?

Meta has been stunted for some time by a downward trending resistance line that proved to be staunch even after the market as a whole rallied.

That was clearly breached on Tuesday when the stock broke convincingly intra-day above the key $600 psychological barrier as well as the resistance threshold.

Credit: TradingView

For those looking for a “Buy” signal on Meta, it doesn’t get much clearer than this. Indeed, a pullback to that resistance level would now offer a near-perfect entry point to capitalize on this breakout if it is indeed the start of something more pronounced.

It certainly seems that whatever conversations were had behind closed doors, the market doesn’t expect them to have anything but tailwinds for Zuckerberg and his shareholders.

How To Play The Breakout

Investors are left with a few ways to play this bullish breakout. The simplest is to buy stock, though admittedly it’s expensive now. To buy just 10 shares higher would cost $6,000.

Another approach would be to consider long call options ideally out in time with at least 90-120 days of to expiration so that the effects of time-decay are not so severe.

A final approach would be to select a bull put spread, meaning to place a short strike price above a long put strike price in the same month, ideally with less than 45 days to expiration.

Whatever the premium captured from the put spread is the maximum profitability the trade could make while the maximum risk would be realized by a share price dip below the long put strike price by expiration.