Over the last week, our Facebook (FB) May 2017 $150 calls (FB170519C00150000) have moved substantially higher following strong earnings results at Amazon (AMZN), Microsoft (MSFT) and in particular Alphabet (GOOGL), which like Facebook are all benefitting from the shift to digital advertising. Last night our FB calls closed at $5.35, which brings the average return across our two buy-ins to more than 270%:

• 224.2% return from the initial position we took on March 30, 2017
• 338.5% return from the second dip into the calls we made on April 20, 2017

Even though Connected Society company Facebook (FB) has a track record of beating Wall Street expectations when it reports its quarterly results, from time to time whisper expectations that are above published forecasts can get the better of a company. Given the strong quarterly results coming out of Alphabet, odds are Wall Street is expecting Facebook to deliver several pennies better than the consensus forecast for 1Q 2017 that calls for EPS of $1.12 on revenue of $7.83 billion.

While we too expect Facebook to deliver solid results, our concern is over the potential for whisper number expectations to be rather high, resulting in the shares getting hit even if they beat the published expectations number.

To manage that potential downside:

• We are selling half of our Facebook (FB) May 2017 $150 calls (FB170519C00150000) call position this morning, while keeping the remaining half in play to capture additional upside should Facebook deliver a knockout quarter.
• As we do this, we will boost our protective stop loss on the FB calls to 4.00 from 1.90, which will serve to lock in a gain of more than 175 percent on the remaining call position.