Tuesday, January 26, 2010

AMZN could be another Earnings play

This one has a 22% spread between IV and HV. This could be a good candidate for an Iron Condor sale. Take a look at the chart below:


  1. So I talked to Steve about AMZN as a potential play and he said that he is planning to put an Iron Condor on tomorrow before earnings. The more I think about this position and look at the difference between IV and HV and look back to see what happened last earnings release. I get the gut feeling that this is going to be a better play to the upside.

    So I may look at buying some call options or maybe some call spreads tommorrow before the trading day is over. I just feel like I would be giving my money away on the Iron Condor if we get a move like we did last earnings. As it stands right now the ATM straddle is pricing in about a 11.5% move.

    We will see.

  2. So two things here, first, your gut has got you to where you are today. It's never 100% right but from a net perspective, it's right. Second, as you'll see in my AAPL analysis post, although we're learning a lot, we can't lock ourselves in to just literally following for the sake of following. I have to keep IWO as an independent idea generator and either agree, disagree, or modify as necessary.

    I'm glad to see that you are following your gut and making your own decision.

  3. I think we also have to keep in mind that what he might be showcasing for the group as a whole, doesn't make sense for each of us individually. For instance, once I'm comfortable I'm going to play with portfolio much larger than the theoretical $40,000. And my risk tolerance levels are probably going to be a bit higher than a group as well.

  4. What do you think about this idea, you are bullish but don't like the condor approach. How about doing a ratio straddle. You buy 2 long calls and 1 long put. This way if you're right you are profiting, if you're wrong you have some protection. I'm not versed enough yet on TOS to play with the simulator. If you have time, can you see how this scenario would play out with $ just using guestimates of movement, like say $5 in both directions and IV movement in both directions. I think the calculation tool can take something from the idea stage to either abandonment, implementation, or adaptation.

    I need to get up to speed on the TOS platform so I can do these things myself and then share some coherent ideas rather than just pondering shit.

  5. I totally agree. I never intend to just follow blindly and there have been several ideas that I got from IWO but played it my own way. For example the play in STLD, I bought 5 synthetic positions and made about $500. He reccomended buying the shares and selling covered calls. In the end whom ever followed that trade lost money and I made $500 because I took and Idea and in my opinion employed a better position. And even with the trade ideas that he gives that I decide to put on, I do not follow blindly. My management of positions is another skill that has allowed me to be profitable. There were a couple of positions that I waited to execute on and got better fill prices which resulted in smaller losses when I cut them. Or I have cut positions before he has reccomended them. The there are just positions or ideas that I do not find attactive. But this is all to be expected. Like you said this is a source of idea generation the we need to decide how we execute on the knowledge and the ideas that we are receiving. I could go on and on but I think you get what I am saying. On top of all that I have actually added a column in my trade sheet that I track whether it is a trade idea from IWO, Onn.tv, or me, or in the future you. And I have created another little table to see where I make most of my money and if the other places I am getting ideas are profitiable.

    I like the idea of playing AMZN earnings with a ratio straddle. That is the same idea I reccomended for RIMM in an earlier comment today. I will run the numbers and add them to my orignal post on AMZN.