Meta shares have continued to climb, pushing up pricing across the options market. Options strategist Mike Khouw said a new consumer hardware product and progress in artificial intelligence are creating fresh ways to structure exposure to the stock and its volatility.
The central idea is to use elevated time value in near-term options to help fund a longer-dated call. The structure involves selling both a call and a put, however, so its profit and loss depends on Meta's price movement before and around expiration. It should not be treated as a simple bullish trade.
Meta's One-Month Implied Volatility Reaches 44%
Meta's recent share-price gains have become a focal point for the market. As bullish sentiment has built, one-month implied volatility has risen to about 44%, compared with an average of roughly 37% over the past year. That places it around one standard deviation above its annual average.
Higher implied volatility generally means more expensive option premiums. For sellers, if the stock does not make a move materially larger than the market expects, time value can decay more quickly as expiration approaches. For buyers, however, the same increase in premiums raises the cost of establishing a position.
Khouw's proposed structure uses near-term options with roughly one month left to expiration, such as contracts expiring on October 30. It involves selling one out-of-the-money call and one out-of-the-money put. The premiums collected from those two options can offset part of the cost of a longer-dated call.
Near-Term Strangle Paired With a January Call
The strategy also includes a call expiring in January of next year. Because near-term options typically have a higher Theta, or rate of time-value decay, than longer-dated options, the premiums from selling the shorter-term contracts may reduce the overall carrying cost even if they do not fully cover the purchase of the January call.
Under this scenario, if Meta is trading between $700 and $900 when the October options expire, the two short options are more likely to retain some of their time value. If the shares then continue rising into year-end, the longer-dated call could provide greater directional exposure.
The structure does not eliminate risk. If Meta moves decisively outside the assumed range before the near-term expiration, either the short call or the short put could generate substantial losses. Gains on the longer-dated call may not fully offset those losses. The outcome will also depend on the strike prices, premiums, time remaining and changes in implied volatility.
Muse Charm Extends Meta's Hardware Push
Another factor supporting market interest is Meta's surprise launch of a new consumer hardware product called Muse Charm. The artificial-intelligence device is designed as a small accessory that can be attached to a keychain and used for on-demand interaction.
The launch indicates that Meta is pursuing a consumer AI hardware strategy distinct from those of Apple and Google. Some of Meta's earlier hardware products fell short of initial market expectations, leaving the new device's longer-term adoption dependent on actual sales, usage frequency and integration with the company's broader ecosystem.
At its Connect event, Meta also demonstrated a lighter virtual-reality headset and audio-only smart glasses. Together with Muse Charm, those products form part of Meta's portfolio in spatial computing and wearable devices as the company seeks to extend AI beyond phones and computers into products people use in everyday settings.
Muse Connects With Walmart and Other Retailers
Meta's Muse AI agent is also expanding into retail integrations. It can currently connect with major retailers including Walmart, Best Buy and Gap. These relationships allow users to access products and retail functions through the AI service, while Meta works to position Muse as an entry point for consumers using agentic AI.
For the market, the hardware launch, retail access for the AI agent and higher options volatility are all part of the current trading narrative around Meta. Khouw's approach focuses on using the elevated time value of near-term options alongside a longer-dated call, but the strategy's outcome still depends on whether Meta remains within the assumed range and how the shares perform through year-end.