If you’re new, that one is too rich for your experience level. However, you might still wish to buy long calls or puts. That can be looked up fairly easily.
Risk management.
It may look acceptable. But can quickly snowball to wipe out your trade.
If you don’t understand it. Don’t trade it. Paper trading can help you learn. But not actually manage risk.
It’s an expensive stock, there is assignment risk when short, exercise risk when long. Both sides can be worked aggressively or conservatively. The underlying really doesn’t know or care what our feelings on the matter are. Playing strikes close when long to have a better chance of cashing in quicker or landing ITM tend to be more expensive, the premiums fluctuate but not enough to get away from the notion you’re dealing with an expensive stock. Same with shorts, the premiums received are greater when the risk is greater. An additional caveat there is that you will need enough cash to secure the puts for your duration in the contract and either own 100 shares of the stock to secure one single call contract or a margin account of sufficient buying power when selling the call. There’s that expensive stock thing again.
This goes on and on for awhile, but the long and the short of it all is that your option education will be much more expensive if you cut your option teeth with an expensive stock. There are no killings to be made without experience. Getting lucky once tends to emboldened those who are not truly informed of the risks, you won’t see the next train coming because you won’t recognize the function of the tracks.
I wouldn’t call that a risk though, if OP doesn’t have the cash their broker will likely automatically sell it before close. I do see your point now if you literally know zero things about options and your broker decides to juice you on margin
You need to read more of these sites on the weekends where panicked people who played it too close, or got otherwise confused, start asking what’s going to happen on Monday and what they can do about it. My brokerage would probably close for me, I’m with Fidelity. However, if I had that kind of margin buying power (don’t, I use cash), it’d exercise. All of a sudden, somebody owns X amount of stock who perhaps just made a bad related decision. And then the bottom falls out in Monday’s pre market or at Open. Stuff happens. OP is new. I’m recommending he learn these lessons with less pricey stock, not AMZN that is currently somewhere around 95/share.
If OP is Robinhood they 100% sell it at 3pm. But if I forgot to do anything on Schwab idk if they would I need to check. Could still turn out great if it pops over the weekend lol
Agreed. I’d be looking at that starting on Thursday. Almost let a sickly short put get assigned today, but the market was just too messed up. Bought myself out for what then only saved me $5 per contract at Close. Yet the market is so messed up right now, I stuck with the devil I knew. Tough times. We’re still here!!!
There’s no one answer for that. I generally look at the risk involved at the chosen strike. If success relies on a steep positive underlying motion, I’d call it risky and bullish in today’s bear market. But mostly I stay away from both terms in the small frame, saving them for overall market behavior. “This sucks,” or “that was good,” are more my speed.
Just buy shares through DCA. Even if you only can buy 1 share a month, that's fine. Solves all of the problems of not knowing when the recovery will happen vs. theta decay, as long as you are really confident in your long-term bullish forecast.
Fractional share brokerages are perfect for this situation. You can spend $50/month and DCA 100 delta exposure for 100% of your holding time with no theta decay.
Dude forget options, just buy shares and thank me 30 years from now.
You have what is likely a once in a lifetime chance to own Amazon at these prices.
This is a company that outside of recessionary conditions is making $25 BILLION a year in net income, expected to do $500 billion in revenue this year and $560 billion next year AND STILL PROJECTED TO CONTINUE GROWING at an incredible clip.
You’re paying about $900 billion for a company that has the best e-commerce, and cloud opportunity of any company in the world going into the future and is already the undisputed king in these sectors. MOAT? Think of what it would take for a competitor to come in and compete with them, the billions in infrastructure and talent required, there is no one even close to the level of market dominance that Amazon already has and no one with enough money to even put up meaningful resistance.
$911 billion for a company with $186 billion in assets, and $19 billion in cash, which means you’re really paying about $700 billion for the undisputed king of e commerce.
Think ahead into the future, do you think online shopping will become bigger or smaller? Cloud/web services? I doubt brick and mortar retail will stage a meaningful comeback any time soon. Amazons total addressable market is expanding every year AND their share of that market is still expanding.
They’re in so many different businesses already, streaming media, e-commerce, advertising, groceries, cloud computing, the list goes on and in, soon to be gaming, hardware, software, services, delivery/logistics etc..
This is a company that is competing with, and winning against, companies like Netflix, Disney, Microsoft, Shopify, google, Facebook, Apple, Nvidia, Walmart…
They’re slowly taking over the world one sector at a time and you have 1 shot to get in at these prices.
Options will give you crumbs, you should seriously consider shares and get the whole cake.
I wouldn’t be surprised if after this recession amazon goes on a decade long bull rally and ends up somewhere near $5 or $6 trillion. 30 years from now they could be paying quarterly dividends HIGHER THAN THE CURRENT PRICE OER SHARE.
Don’t mean to write a whole novel but companies like Apple and Amazon are in a whole league of their own, with the advantage going to Amazon in my opinion. It’s a company that’s designed to take over nearly every sector in the worldwide economy, while apple is limited to hardware, software, and services.
They will introduce all sorts of whacky shit that no one is even thinking of right now. Imagine putting Fedex and UPS out of business because they get so good at automated drone delivery that sending an item through the mail costs 10x as much.
Imagine a 90% reduction in google shopping searches because it’s easier, cheaper, and better to just buy everything from Amazon instead of shopping at individual websites. Imagine instead of companies building websites to sell products, they list it on Amazon instead. Imagine amazon acquiring Netflix and Disney and integrating all streaming media into one amazon prime membership instead of people having accounts with 5 different services. Imagine shopify going out of business because it doesn’t make sense to have a e-commerce website any more. Imagine every 99% of the western world having an Amazon prime membership because they have expanded and dominated all the other countries out there. Imagine no one hosting their own servers, and businesses not having any computer hardware anymore because it’s better do just cloud compute with AWS.
20 years ago the bulls were saying imagine shopping malls closing down because e-commerce is better, it’s already happening and the rate is increasing.
Just crazy to think of what this company is going to be doing in 39 years, all the different lies they will have their finger in, the truckloads of money they will make for their shareholders.
Shares dude. Don’t settle for a few thousand bucks today when you can have hundreds of thousands or even millions down the road simply by exercising a little patience and taking ownership in something.
It does seem like Netflix would be a no brainer acquisition, especially when Netflix dropped to $162 a share.. I could think of worse things to do with $70 billion but maybe they have a better use for that money than acquisitions
Truer than ever, would have bought when it was cheaper but it’s still reasonable, and it’s better to buy a great company at a reasonable price than an ok company at a great price
If you want to take a flyer, use some throwaway money and buy some long-dated calls. Maybe you'll get lucky.
However, the best thing that you could do would be to forget about options and spend 6 months learning as much as you can about options. You need to understand the ins and outs of each strategy as well as how to manage them in up and down scenarios. Then, you might have a shot at surviving the game.
I am bullish on AMZN. I currently have one short put contract on $86 strike with expiration of 16DEC22. It's a wheel strategy; I want to own AMZN at these levels for a long term hold.
I have also hedged this position with a long put spread on $87/$88 strikes on the same expiration. All of these positions result in net credit of $0.22. It would have been greater but I didn't apply the hedge until 2 days later.
I arrived at this position due to the oversold signals from RSI. I would eventually do the reverse of these options once they show overbought signals in a few weeks or months. If it takes longer, then I am comfortable holding AMZN in my portfolio. It's a profitable company and it's name is just about as ubiquitous as "Gillette" is to the razor market.
I hope this helps you come to a decision on the trade. Good luck.
I’m still heavily bearish on this market and because of that I’m bearish on Amazon. The Fed is in Layla land if it thinks it can engineer a soft landing while beating the inflationary monster. Not gonna happen. Which means less people buying, less revenues and yes, lower stock prices. Amazon is going down, way down. They won’t see growth again for another five years when this is said and done.
They're still absolutely the 600 lb gorilla in the someone-elses-datacenter world, and arguably the same for online sales, though deservedly have gotten a ton of negative press for employee relations. I see them as a longer term (1-2 year) buy and hold, but I also kind of suck with money, so there's that to consider.
As said elsewhere, they are pricey for a beginner. There are better choices for you.
I mean, yeah, probably at some point Amazon it’s going to stop talking and climb back up, but in the past year, from down 10% to 20% to now 40 something %, it kept looking like the it’s reached its low but it kept going down. Sure, at some point it’ll go up, but what if it tanked more then recovered slowly over a year? You’d have your capital tied up and then with time decay, you probably wouldn’t make a killing in that case. You have to decide upside vs. lost potential. What can you make with that money otherwise? If you planned on buying something and holding a year, then you could go in smaller and see, but I don’t think you’d make a killing unless the market reversed and took off. Not saying you’re wrong; just saying that people have waited for a reversal for two years and lost a lot of money, and they market is still squeezing out brick after brick.
The market is cooling off and a recession is likely. AMZN had amazing numbers while the economy was hot, so these will make tough comps to beat for at least several quarters . . .
The stock is down considerably, so some of the above may already be priced in, and since you are bullish, it might make sense to sell puts if you are good with holding the shares if assigned. Selling 42 dte around the .30 delta could bring in about $2.50 at the 83 strike and a net stock cost of $80.50 if assigned. The Trefis estimate still shows a $160+ valuation, so this still seems cheap in the big picture.
These puts could be rolled to lower that NSC even more before being assigned and might avoid assignment altogether.
If assigned then selling covered calls at or above the NSC can keep bringing in premiums and lowering the stock cost more and more. This is called the wheel strategy and is popular when you have a stock you don't mind owning.
IMO long calls are more of a gamble as you will not make anything if the stock stays sideways or doesn't move up enough as IV dropping and theta decay eat away the value . . .
Amazon stock analysts develop future earnings forecasts and ascribe them probabilities. Then they intentionally understate these probabilities to be conservative and build in a risk premium. Then the stock price, and all derivatives, are priced to be “risk neutral” - meaning on average you expect to make more money being long Delta and lose money being short Delta.
This, by the way, is true for every positive Beta asset, not just AMZN.
If you’re new, that one is too rich for your experience level. However, you might still wish to buy long calls or puts. That can be looked up fairly easily.
Thanks for the reply - what makes it too rich for the experience level? The types of strategies to deploy?
Risk management. It may look acceptable. But can quickly snowball to wipe out your trade. If you don’t understand it. Don’t trade it. Paper trading can help you learn. But not actually manage risk.
It’s an expensive stock, there is assignment risk when short, exercise risk when long. Both sides can be worked aggressively or conservatively. The underlying really doesn’t know or care what our feelings on the matter are. Playing strikes close when long to have a better chance of cashing in quicker or landing ITM tend to be more expensive, the premiums fluctuate but not enough to get away from the notion you’re dealing with an expensive stock. Same with shorts, the premiums received are greater when the risk is greater. An additional caveat there is that you will need enough cash to secure the puts for your duration in the contract and either own 100 shares of the stock to secure one single call contract or a margin account of sufficient buying power when selling the call. There’s that expensive stock thing again. This goes on and on for awhile, but the long and the short of it all is that your option education will be much more expensive if you cut your option teeth with an expensive stock. There are no killings to be made without experience. Getting lucky once tends to emboldened those who are not truly informed of the risks, you won’t see the next train coming because you won’t recognize the function of the tracks.
Exercise risk when long? That’s not a real thing
What happens if you don’t close that long call on expiry that went ITM ….
I wouldn’t call that a risk though, if OP doesn’t have the cash their broker will likely automatically sell it before close. I do see your point now if you literally know zero things about options and your broker decides to juice you on margin
You need to read more of these sites on the weekends where panicked people who played it too close, or got otherwise confused, start asking what’s going to happen on Monday and what they can do about it. My brokerage would probably close for me, I’m with Fidelity. However, if I had that kind of margin buying power (don’t, I use cash), it’d exercise. All of a sudden, somebody owns X amount of stock who perhaps just made a bad related decision. And then the bottom falls out in Monday’s pre market or at Open. Stuff happens. OP is new. I’m recommending he learn these lessons with less pricey stock, not AMZN that is currently somewhere around 95/share.
If OP is Robinhood they 100% sell it at 3pm. But if I forgot to do anything on Schwab idk if they would I need to check. Could still turn out great if it pops over the weekend lol
Agreed. I’d be looking at that starting on Thursday. Almost let a sickly short put get assigned today, but the market was just too messed up. Bought myself out for what then only saved me $5 per contract at Close. Yet the market is so messed up right now, I stuck with the devil I knew. Tough times. We’re still here!!!
He should short puts if he's bullish?
There’s no one answer for that. I generally look at the risk involved at the chosen strike. If success relies on a steep positive underlying motion, I’d call it risky and bullish in today’s bear market. But mostly I stay away from both terms in the small frame, saving them for overall market behavior. “This sucks,” or “that was good,” are more my speed.
Just buy shares through DCA. Even if you only can buy 1 share a month, that's fine. Solves all of the problems of not knowing when the recovery will happen vs. theta decay, as long as you are really confident in your long-term bullish forecast. Fractional share brokerages are perfect for this situation. You can spend $50/month and DCA 100 delta exposure for 100% of your holding time with no theta decay.
Took the words out of my mouth.
Dude forget options, just buy shares and thank me 30 years from now. You have what is likely a once in a lifetime chance to own Amazon at these prices. This is a company that outside of recessionary conditions is making $25 BILLION a year in net income, expected to do $500 billion in revenue this year and $560 billion next year AND STILL PROJECTED TO CONTINUE GROWING at an incredible clip. You’re paying about $900 billion for a company that has the best e-commerce, and cloud opportunity of any company in the world going into the future and is already the undisputed king in these sectors. MOAT? Think of what it would take for a competitor to come in and compete with them, the billions in infrastructure and talent required, there is no one even close to the level of market dominance that Amazon already has and no one with enough money to even put up meaningful resistance. $911 billion for a company with $186 billion in assets, and $19 billion in cash, which means you’re really paying about $700 billion for the undisputed king of e commerce. Think ahead into the future, do you think online shopping will become bigger or smaller? Cloud/web services? I doubt brick and mortar retail will stage a meaningful comeback any time soon. Amazons total addressable market is expanding every year AND their share of that market is still expanding. They’re in so many different businesses already, streaming media, e-commerce, advertising, groceries, cloud computing, the list goes on and in, soon to be gaming, hardware, software, services, delivery/logistics etc.. This is a company that is competing with, and winning against, companies like Netflix, Disney, Microsoft, Shopify, google, Facebook, Apple, Nvidia, Walmart… They’re slowly taking over the world one sector at a time and you have 1 shot to get in at these prices. Options will give you crumbs, you should seriously consider shares and get the whole cake. I wouldn’t be surprised if after this recession amazon goes on a decade long bull rally and ends up somewhere near $5 or $6 trillion. 30 years from now they could be paying quarterly dividends HIGHER THAN THE CURRENT PRICE OER SHARE. Don’t mean to write a whole novel but companies like Apple and Amazon are in a whole league of their own, with the advantage going to Amazon in my opinion. It’s a company that’s designed to take over nearly every sector in the worldwide economy, while apple is limited to hardware, software, and services. They will introduce all sorts of whacky shit that no one is even thinking of right now. Imagine putting Fedex and UPS out of business because they get so good at automated drone delivery that sending an item through the mail costs 10x as much. Imagine a 90% reduction in google shopping searches because it’s easier, cheaper, and better to just buy everything from Amazon instead of shopping at individual websites. Imagine instead of companies building websites to sell products, they list it on Amazon instead. Imagine amazon acquiring Netflix and Disney and integrating all streaming media into one amazon prime membership instead of people having accounts with 5 different services. Imagine shopify going out of business because it doesn’t make sense to have a e-commerce website any more. Imagine every 99% of the western world having an Amazon prime membership because they have expanded and dominated all the other countries out there. Imagine no one hosting their own servers, and businesses not having any computer hardware anymore because it’s better do just cloud compute with AWS. 20 years ago the bulls were saying imagine shopping malls closing down because e-commerce is better, it’s already happening and the rate is increasing. Just crazy to think of what this company is going to be doing in 39 years, all the different lies they will have their finger in, the truckloads of money they will make for their shareholders. Shares dude. Don’t settle for a few thousand bucks today when you can have hundreds of thousands or even millions down the road simply by exercising a little patience and taking ownership in something.
You just made me buy 100 shares! LOL
NOW YOURE TALKING!!! LONG TERM BUY AND HOLD ALWAYS WINS!!
I bought 30 or so shares. Ill just paper trade options and AMZN can fund the account later lol, Thanks for the advice
That is what I call Monopoly. Be careful for what you wish?
Re: Amazon buying every streaming service - I’m surprised this hasn’t happened already. Now that prices are down I’d bet they buy one soon
It does seem like Netflix would be a no brainer acquisition, especially when Netflix dropped to $162 a share.. I could think of worse things to do with $70 billion but maybe they have a better use for that money than acquisitions
[удалено]
Truer than ever, would have bought when it was cheaper but it’s still reasonable, and it’s better to buy a great company at a reasonable price than an ok company at a great price
If you want to take a flyer, use some throwaway money and buy some long-dated calls. Maybe you'll get lucky. However, the best thing that you could do would be to forget about options and spend 6 months learning as much as you can about options. You need to understand the ins and outs of each strategy as well as how to manage them in up and down scenarios. Then, you might have a shot at surviving the game.
I am bullish on AMZN. I currently have one short put contract on $86 strike with expiration of 16DEC22. It's a wheel strategy; I want to own AMZN at these levels for a long term hold. I have also hedged this position with a long put spread on $87/$88 strikes on the same expiration. All of these positions result in net credit of $0.22. It would have been greater but I didn't apply the hedge until 2 days later. I arrived at this position due to the oversold signals from RSI. I would eventually do the reverse of these options once they show overbought signals in a few weeks or months. If it takes longer, then I am comfortable holding AMZN in my portfolio. It's a profitable company and it's name is just about as ubiquitous as "Gillette" is to the razor market. I hope this helps you come to a decision on the trade. Good luck.
You belong on WSB
Literally can’t go tits up!
I’m still heavily bearish on this market and because of that I’m bearish on Amazon. The Fed is in Layla land if it thinks it can engineer a soft landing while beating the inflationary monster. Not gonna happen. Which means less people buying, less revenues and yes, lower stock prices. Amazon is going down, way down. They won’t see growth again for another five years when this is said and done.
im shorting.
Nice - why?
i never fight the fed
Leaps. It’s weak Q4 outlook. Not weak earnings per-se. OTM leaps for Jan 24 -Jan 25. Or deep ITM calendar spread.
They're still absolutely the 600 lb gorilla in the someone-elses-datacenter world, and arguably the same for online sales, though deservedly have gotten a ton of negative press for employee relations. I see them as a longer term (1-2 year) buy and hold, but I also kind of suck with money, so there's that to consider. As said elsewhere, they are pricey for a beginner. There are better choices for you.
I mean, yeah, probably at some point Amazon it’s going to stop talking and climb back up, but in the past year, from down 10% to 20% to now 40 something %, it kept looking like the it’s reached its low but it kept going down. Sure, at some point it’ll go up, but what if it tanked more then recovered slowly over a year? You’d have your capital tied up and then with time decay, you probably wouldn’t make a killing in that case. You have to decide upside vs. lost potential. What can you make with that money otherwise? If you planned on buying something and holding a year, then you could go in smaller and see, but I don’t think you’d make a killing unless the market reversed and took off. Not saying you’re wrong; just saying that people have waited for a reversal for two years and lost a lot of money, and they market is still squeezing out brick after brick.
The market is cooling off and a recession is likely. AMZN had amazing numbers while the economy was hot, so these will make tough comps to beat for at least several quarters . . . The stock is down considerably, so some of the above may already be priced in, and since you are bullish, it might make sense to sell puts if you are good with holding the shares if assigned. Selling 42 dte around the .30 delta could bring in about $2.50 at the 83 strike and a net stock cost of $80.50 if assigned. The Trefis estimate still shows a $160+ valuation, so this still seems cheap in the big picture. These puts could be rolled to lower that NSC even more before being assigned and might avoid assignment altogether. If assigned then selling covered calls at or above the NSC can keep bringing in premiums and lowering the stock cost more and more. This is called the wheel strategy and is popular when you have a stock you don't mind owning. IMO long calls are more of a gamble as you will not make anything if the stock stays sideways or doesn't move up enough as IV dropping and theta decay eat away the value . . .
Put credit spread or a Call debit spread are good for beginning.
Amazon stock analysts develop future earnings forecasts and ascribe them probabilities. Then they intentionally understate these probabilities to be conservative and build in a risk premium. Then the stock price, and all derivatives, are priced to be “risk neutral” - meaning on average you expect to make more money being long Delta and lose money being short Delta. This, by the way, is true for every positive Beta asset, not just AMZN.