General Options Blog

Option Millionaires Thursday Recap and Friday Gameplan

It was another great day today. I scalped X calls again. Got the $28 calls early for $.29 sold at $.40 (I have to check executions, I think that price is right) those calls closed $.51 bid. OM chat is becoming X rated courtesy of UPB. LNKD sold out from $.75 on the $105's they hit $2.25. SINA my $.17 calls from Wednesday I sold out at $.38. SLV $30 calls I bought on Wednesday I sold out at $.40, they went over $.45

For tomorrow My gameplan:

I'll be looking to sell.............

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AMZN Option Traders Will Wake Up To Potentially 1,000% Gains

AMZN blew out its earnings tonight and the stock surged almost $30 after hours.  Call buyers who needed a 4% move higher just to break even tomorrow, will be sitting on  some amazing gains when AMZN opens for trade.  This is exactly why you trade earnings events.  It also shows the potential gains stock options can provide.

If AMZN opens at $225 tomorrow those who bought the $220 calls will be able to sell them for over $5.  Those calls closed at $.33 and were as low as $.12 earlier in the day.  10 contracts at $.33 would cost $330, if AMZN goes to $225 they could be sold for $5k.  $330 into $5k.

The call buyers of the less riskier strikes will also see some rather lofty gains.  The $215 calls closed at $.70 they should be at $8-$10 tomorrow.

The call and put volume was not skewed in either direction and volume was evenly distributed.  A move like this is great for option traders.

One could have played both the puts and the calls and made out with a big profit.  This is a strategy known as a strangle.

You could have bought the $215 calls 5 contracts at $.70 for $350.

And bought 5 of the $175 puts for $400 cost.   Total cost $750.   If AMZN opens at $225 you are looking at $5,000 - $750 for a $4,250 profit.  This will be the norm tomorrow for AMZN call holders.... big profits.  Congratulations.

AMZN option chain at today's close:

 

Whats going on in Chat???

One of the reasons to join Option Millionaires is the chat room. I have been in many chat rooms, and have yet to find as diverse a trading community as we have here. Not only are there many trades and strategies being posted, but it feels like one big community focused on making money!

Here are some of the trades from yesterday I posted in chat that made some serious moves:

1. BIDU was on the morning watchlist. Here is what i wrote:

BIDU earnings were great, but stock tanked AH’s. Looks like all the ANALysts reduced PTs but kept rating, so stock should bounce IMHO to $137+ or so. Will look for $135 calls at open.

What i said in chat:

2012-04-25 09:29:41            Message            jimmybob            Option Millionaires Live            BIDU $135 calls... have order for 10 @ .40

2012-04-25 09:30:37            Message            jimmybob            Option Millionaires Live            opentrade BIDU #$135 calls @ .47 AVg 10 of them

2012-04-25 10:57:50            Message            jimmybob            Option Millionaires Live            BIDU will be green today SAID it PM when it was 128

BIDU ran from $128 to $136.14 and went green just like i said. The $135 calls i bought in the morning were a 400% gainer. 

2. LNKD was on the morning watchlist. Here is what i wrote:

LNKD- FB IPO rumored delay brought some more selling pressure to the stock, but it is trading over $100 pm, and still like her to go nuts over $110 VERY SOON. 105 and 110 calls will provide more profit oppty’s just like last week.

What i said in chat:

2012-04-25 11:55:56            Message            jimmybob            Option Millionaires Live            opentrade LNKD 105 calls added 20 more @ .50 avg

2012-04-25 12:37:40            Message            jimmybob            Option Millionaires Live            LNKD volume is shit... great sign

The LNKD 105 calls hit 2.15 today from .50 entry yesterday. a 400%+ gainer.

3. With Bernanke speaking, there was sure to be a movement in the USD. Any weakening and commods would move to the upside. Silver became the play in the afternoon on the bounce. Brought silver to the chatroom, then posted the AGQ trade on the calls.

What i said in chat:

2012-04-25 14:10:31            Message            jimmybob            Option Millionaires Live            SILVER TIME FOLKS

2012-04-25 14:09:59            Message            jimmybob            Option Millionaires Live            opentrade AGQ 11 of the 50 calls @ .35

2012-04-25 14:11:07            Message            jimmybob            Option Millionaires Live            AGQ 48.12

AGQ hit 50.75 today, and the 50 calls hit 1.05 for a 300% gainer.

 

These were some of the calls in the chat from myself, and there are many others from everyone in the room. And there are many experienced traders ready to answer any questions you may have. Cool think about the site, is you get a 14 day trial to give it a whirl. Check us out: https://www.optionmillionaires.com/subscribe/

 

Option Trades For AMZN Earnings

 

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.