Option Trades For AMZN Earnings

amzn425

 

Back on February 24th I wrote about AMZN while it was trading at $178 and noted the stock was trading at support.  It has yet to break that support and has gone to $210 since then.   This was the chart I posted back in late February.  The circle on the chart above shows the approximate date I created the chart below:

 

 

 

Today the stock closed at $194 and tomorrow after the bell AMZN will report their earnings.  With a 2% gain today the calls were up roughly 50% on many of the strikes.  There is a large premium heading into tomorrow nights earnings release.  So what type of option trades can we try and make for the big earnings report tomorrow?  I have a tough time buying when premiums are so high.

 

If you plan on trading AMZN options tomorrow and holding through earnings you will need at least a 4% move from AMZN to make a profit.  Considering AMZN has moved 10% or better many times in the past, a 4%  or more could be in the cards tomorrow after the close.

I am going to treat AMZN much like I treated AAPL before earnings.  I wasn't going to touch AAPL, but AAPL continued to fall and I saw a great opportunity to buy calls.  I picked up the $605 strike for $3.75.  I sold that position this morning at the open when the calls were being bought for over $15.  My fill was exactly $15 from $3.75.

I am hoping for a dip in AMZN stock, I will then look for the calls.  If we get a nice rip I will look for the puts.  It is a very simple strategy, and it pays off more often than not.  If AMZN stays flat, premiums will rise and I will sit on my hands and wait for the Thursday open. I will post my move in the chat room.

Volume on AMZN options were slightly skewed towards the calls today.  I think AMZN will burst over $200 on earnings, but it will be tough to trade if I can't get cheaper $205 calls.  My hope is AMZN gets dumped tomorrow much like AAPL did.   If I don't get a price I like, then I won't be playing AMZN.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)

2 thoughts on “Option Trades For AMZN Earnings”

Leave a Reply