General Options Blog

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.

LinkedIn (LNKD)

When I was a kid, my grandmother always told me don't talk to strangers. Fast forward 20 years, and I still hear her voice as I read countless opinions on LinkedIn (LNKD) and why it will go down from here.  Not that I will ever talk to some of those people, and I am sure as heck not going to listen to them. The bearish sentiment by the retail investor gives more credence to my argument that LinkedIn (LNKD) will see $150+ by the end of the summer.

It's only when a growth stock is in the midst of an epic run, that the retail trader starts getting on the bandwagon. And of course they are the ones holding the bag on the way down. It's how this market works, and  will never change. Just like the economy, the rich get richer and the poor get poorer.

LinkedIn(LNKD) is currently trading at 101.43 up 3.38% on light volume. Expect the knife to come out on the BEARS, as they are put back into their cave until the fall.

SINA Corporation (SINA)

Bad news can pummel a stock into submission. Take a look at the chart for SINA Corporation (SINA) below. We have made some very profitable trades on SINA Corporation (SINA) in the past, and we think it's ready to make another move to the upside.

When SINA moves, it tends to be violent as folks chase a move they fear they are missing. Lets see if SINA starts pulling out of oversold territory today.

 

We currently hold the $60 and $62.50 April Calls.

Tomorrow’s Gameplan – AAPL, FSLR, CAT, X, LNKD, SLV

It was a great day for me on Tuesday. I sold my SLV $30 calls at $.48 for a nice little 20% gain. I sold my X $28 calls for a nice 28% haircut. I held my LNKD calls now at a decent loss, but I think I will make out this week.

I bought GS $115 calls at $.30. They hit $.90 and closed at $.86. I sold out at $.78. A great trade which I posted both my buy and sells in the chat room. More on GS later on.

X on the dip and near the session lows I bought the $30 calls for $.06 and the $28 calls for $.27. Both options soared as X recovered its losses. In the chat room with X down big I said I saw the stock going green, sure enough X was up over 1% after being down over 4%. It then faded late in the day.

AAPL I bought the $605 calls for $3.75. I'm not sure many of you thought it was the right move at the time. My thoughts were that the drop in AAPL price offered a chance to get in the calls at a much cheaper price. It was worth the risk and it should pay off nicely for me tomorrow.

Tomorrow… oh yes tomorrow.

Gameplan.

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