Saturday, April 28, 2012

AMZN: Good trade gone bad

http://screencast.com/t/ldR5JjzTqHIq

21 comments:

  1. http://screencast.com/t/H0GtMW3G

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  2. What is your plan if the stock drops hard? I think the percentage return you got on the puts today might be worth taking it off the table.

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  3. It depends what you mean by a hard drop. If you mean a drop below $220 I have no plan to deal with that at the moment.

    I am still going to play my assumption that the stock is going higher, but that it will first retrace a little bit to the downside as in the EBAY example (which didn't happen today). If the stock goes under $225 I'll buy back the 220 call, and then look for another move up and try to sell the 230 call - a staggered roll.

    The bigger problem for me is if tomorrow is just like today and it goes straight up. If that happens then I'll close the 225 puts and consider selling the 230 puts, and maybe roll the 220 call up to 225.

    Your suggestion to take the 225 puts off is definitely worth considering. Right now they are up $4710 out of a max of $6750. Maybe I will try to take them off in the morning, and then put them back on if I get the down move sometime during the day.

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  4. Yeah you got 70% of the max premium on those puts in 1 day. I would consider taking it off and it frees you up to sell them again on a dip. Even if there is no dip I just don't like the risk versus the remaining reward for four days of exposure.

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    1. http://screencast.com/t/tREJDOpn

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  5. http://screencast.com/t/swrjHY4KO8

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    1. One small adjustment today. Tried to sell 10 more 235 calls to bring in some credit at the end of the day. Only 5 filled for $0.30 cents. Position going in to expiration tomorrow is

      -30 230 Put
      -25 235 Call

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  6. http://screencast.com/t/fKRE2u8Si

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  7. Trade Update:
    In the May weeklies, sold the May 35 call for $0.61. Position is

    -10 220 Put
    -30 225 Put
    -30 235 Call

    Position delta is about $1420 which is okay as my assumption remains that AMZN is going higher.

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  10. Trade Update:
    Bought in the short 235 calls for $.22 this morning in an attempt to take advantage of market weakness. Then sold the 230 calls (this time against all the puts) in the early afternoon at an average of $0.61 when the stock rallied a little bit. Position delta is now $1240, need a couple of slow days to help this position.

    -10 220 Put
    -30 225 Put
    -40 230 Call

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  11. Trade Update: Rolled the 220 Puts up to 225 for $1.60 credit. Need a small rally in the next couple of days, position is now:

    -40 225 Put
    -40 230 Call

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  13. AMZN is looking pretty good today, trading just under 225 at the moment. Under normal circumstances I would just leave my position alone and see if it expires tomorrow, but unfortunately I will be in an airplane tomorrow afternoon and unable to monitor it. Therefore, made an adjustment to roll this position out to the next week regular May expiration. Rolled the 225 Puts down to 220 for $0.45 credit. Rolled 230 calls for $1.61 credit. Position at this moment has delta of 0.

    -40 220 Put
    -40 230 Call

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  14. Trade Update: Rolled 220 Puts up to 225 strike price for $1.02 credit.

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  15. Trade Update:
    Paid $0.56 to close out the 230 calls. Remaning position is
    -40 225 Puts

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  16. Trade Update:
    Resold the 230 calls for $0.68 this morning.

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  17. Trade Update:
    Have made a few adjustments since my last post - but bottom line is my position is short the 215/220 strangle going into expiration tomorrow - plan is to try to hold that position as long as I can in the hope it will expire worthless and I can be done with this trade.

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  18. Trade Update:
    Was hoping to be out of this trade today but things didn't work out that way. Therefore, rolled the 215 puts down to the next weekly 210 and rolled the 220 calls also. Got 10 cent credit for the puts, and about $1 credit for the calls.

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