Meta's post-Muse rally: a $700 put pays $15.85, but mind the $680 gap

The setup in 30 seconds

Meta ran from $572.34 on Aug 31 to $736.60 at Tuesday's close, including an 11.34% jump on Sept 21 after analysts cheered early adoption of its Muse AI agent. At 1:27 PM ET today it traded at $747.27. Our midday screen checked 15 names from Eddie's watchlist; 7 had a put that passed our liquidity and yield filters, and META had the deepest chain by far. This is a hot stock, so the trade sits below it: the Oct 23 $700 put, 6.3% under spot, paying about $15.85 a share.

The trade

Why this stock, why now

Technicals. RSI(14) is 76.0, which is overbought. Spot sits far above the 20-day ($633.06), 50-day ($610.42) and 200-day ($625.11) averages. Tuesday's volume of 28.1M shares was 1.38× the 20-day average. The Sept 21 gap left an intraday low at $679.60, just under our breakeven. In plain terms: the trend is strong but stretched, and the nearest real floor is the gap near $680, not the strike.

Valuation. META trades at about 22.9× forward earnings versus 25.2× for Microsoft and 26.2× for Alphabet (stockanalysis.com, Sept 23). Q2 revenue was $60.80 billion, up 28% year over year, with Q3 guided to $61–64 billion. In plain terms: even after the rally, you pay less per dollar of expected profit than for two big peers, with faster sales growth.

Income. The Oct 23 put prices at about 42.7% implied volatility, near Cboe's 30-day IV of 42.3% (Sept 22) and below the stock's 49.9% 60-day realized volatility. We do not have a clean 3-month IV history, so we compare against realized vol. In plain terms: the premium is decent, but not rich for how much this stock has actually been moving.

Calendar. Meta Connect opens with Zuckerberg's keynote tonight at 7 PM ET and runs through Sept 24. Q3 earnings are estimated for Oct 28 (not yet confirmed by Meta; Nasdaq's Zacks estimate says Nov 4), and the FOMC meets Oct 27–28. Both land after the Oct 23 expiry. The Oct 30 puts carry about 48.8% IV versus 42.7% for Oct 23, so the market expects the report before Oct 30. The last ex-dividend date was Sept 21. In plain terms: the only big scheduled event inside this trade is Connect, and it starts tonight.

The exit plan

• Take profit: buy the put back at 50–60% of the credit, about $7.93 to $6.34.
• Time exit: if it has not hit the target, close or reassess at 14–21 DTE (Oct 2–9).
• Roll trigger: a close below $680, the Sept 21 gap low. Rolling to Oct 30 or later means holding through earnings, so reprice the risk first.
• If assigned: you own 100 shares at a $684.15 net cost, then sell covered calls at or above that level to keep the wheel turning.

What could go wrong

1. Sell-the-news after Connect. A stock up about 30% since Aug 31 with RSI 76 can drop hard if tonight's keynote disappoints. A slide back into the $680 gap puts the strike under water.
2. Spending worries. Meta guided 2026 capex to $130–145 billion. Any hint of more spending can hit the stock quickly.
3. Legal overhang. A recent $18 billion legal settlement has already weighed on sentiment, and more headlines can hit a crowded trade.

Beginner corner

"Annualized 27.55%" does not mean you earn 27.55% this year. You earn 2.26% on $70,000 over 30 days. The annual figure only lets you compare trades of different lengths. One META put ties up $70,000, so size it against your whole account, not against the premium.