Surviving in the Amazon

I am receiving a lot of questions and comments regarding $AMZN this evening so I thought I would expand with more detail here on my current position. For the earnings event, I put on an options trade:

Now many of the questions have to do with what the above really means so let me break it down:

  • “S 4w 200 $CALL” = Short the May 4 Weekly $200 strike Call. This expires next Friday.
  • “L the May 200 $CALL” = Long the May monthly $200 Call. This expires May 18 2012.
  • “S 4w 170 $PUT” = Short the May 4 Weekly $170 strike Put. This expires next Friday.

The above trade cost $.20 cents to put on. Since the short Calls are “in the money” they can be exercised at any time before expiration, but they are protected by the long May calls of the same strike.

The plan is:

  • Let the weekly short puts expire next Friday and keep all the premium collected.
  • As for the Call side, there is time to address the trade exit choices and I will be doing that in the morning.

 

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