Meta's Legal Challenges Prompt Options Traders to Consider the Jade Lizard Strategy
Meta Platforms is facing significant legal challenges, including a lawsuit from 29 state attorneys general and thousands of related personal-injury cases. These issues have contributed to Meta being the worst-performing stock in the Magnificent Seven over the past year, with its market cap dropping more than $600 billion. Options traders are turning their attention to the 'jade lizard' strategy—a method that collects premium by selling out-of-the-money puts and call spreads—given the current rangebound nature of Meta's shares. The lawsuit in Oakland alleges Meta designed Facebook and Instagram to be addictive for young users, with potential damages as high as $1.4 trillion, though this figure is considered unlikely due to expected appeals. Despite legal risks, much of the downside appears already priced into the stock, which trades at 22 times earnings while still growing revenue by 28%. The jade lizard strategy aims to capture premium without significant risk if Meta's share price remains stable. Traders are targeting options expiring on September 25th as a way to avoid Q3 earnings and trial-related volatility. If the stock stays between short strikes at expiration, traders keep full credit. Downside risks involve purchasing shares below $480 per share, but strategies like covered calls could be used if that occurs.
Tickers: $META
Topics: litigation risk Meta Platforms options trading stock volatility