10/24/2021 Plan:
This week we look at Amazon.com (Ticker: AMZN)
10/24/2021 Plan (continued):
- AMZN – Sell the Oct 29th 3000/2990 put spread for 0.47**
- Z – Sell the Oct 29th 88/85 put spread for 0.36
- INTC – Nov 19 47/45 put spreads for 0.29 (risky)
- Prices are as of market close 10/22/2021, actual fill and strikes may differ depending on Monday’s open, post will be updated accordingly.
- All trades are for educational purposes and do not constitute advice
10/24/2021 Commentary:
Different play in AMZN this week – you’ll note that this is a lower reward higher risk play (based on the credit and the dollars at risk). We are risking $953 to make $47. This is lower than I would normally take, but wanted to provide it as an example (risky) way to play earnings. The Straddle in AMZN is close to $150. We set this put spread at over two times the straddle. If AMZN goes up this week, stays the same, or even goes down 2x the straddle we will make almost 5% in a week on our risk. Earnings are Thursday, so this is essentially an ‘all or nothing’ play – we’ll make the money or we’ll likely lose it all. This is Not a traditional play, but often I’m asked for different ways to play earnings and selling Very far out of the money spreads is one way to do it. This is also a way to try and get long names you would like to hold long term. If you were willing to buy 100 shares of Amazon at $3000 (note, you would need $300k to do so, or $150k on margin), you could sell a wide put spread or even a naked put and take delivery after earnings at a much lower level than it is currently trading at. The risk of course, is that AMZN really plummets and you would be left holding shares at a higher cost basis.
The Z is a quick trade this week that assumes Zillow has stabilized after its big moves last week.
INTC really dropped after earnings. We have traded a post earnings move in INTC many times. Take some caution here – if INTC continues to drop big, probably pass on this trade. For less experienced traders, I would in general suggest waiting until INTC stabilizes a bit and look for an entry next week.
Feel free to Reach out with questions on this or anything else!
10/25/2021 Entry:
Market up nicely and AMZN and Z aren’t available at preferred levels. Did sell INTC Nov 19 47.5/45 for 0.29. Assumption is INTC rebounds after earnings. Will keep an eye on AMZN and Zillow this week. Many of my short puts and put spreads weren’t available, although I did get more covered call opportunities against some long stock. VERY big week in earnings this week particularly in Tech. Should be fun.
10/31/2021 Update:
The INTC put spreads are worth 0.40 and we are therefore down on the trade. INTC made a nice rebound on Friday and I plan to hold these longer with the expectation that they will start to decay and INTC doesn’t return to the 47.5 level. If it closes below that, I may simply close the trade and take the loss. For now, simply holding and letting the options decay.
11/7/2021 Update:
Great move back up in INTC helped our put spreads and they are now worth just 0.08 per spread. These can be closed to book the win (0.21/spread) or left open to try and collect a bit more. I’m doing the latter, but will likely close if I can get out at 0.05/spread.
11/13/2021 Close:
Closed out the INTC put spreads for 0.04, bringing in $25 per spread or $125 for the total position. A nice solid win after INTC’s big post-earnings drop.
