Trade Alert – (AMZN) – EXPIRATION
EXPIRATION of the Amazon (AMZN) March 2020 $1,350-$1,400 in-the-money vertical BULL CALL spread at $50.00 or best
expiration date: March 20, 2019
Portfolio weighting: 10%
Number of Contracts = 2 contracts
The net effect of the Coronavirus is to immediately drive a much larger share of commerce online, with Amazon taking the lion’s share. It is also the only place where you can buy a ten-pound bag of rice. The legacy stores are all out of it.
With the Volatility Index (VIX) then at an incredible $78, the risk/reward for a very deep in-the-money vertical call spread on the highest quality names was very favorable.
As a result, the Amazon (AMZN) March 2020 $1,350-$1,400 in-the-money vertical BULL CALL spread expired at its maximum potential value of $50.00.
The profit should be deposited into your account on Monday and the margin freed up. If it isn’t, get on the phone with your broker immediately.
I believed that Amazon (AMZN) shares were oversold in the extreme, and that there was some nice cherry-picking to be had. This is a stock that you want to hide behind the radiator and keep forever.
This was a bet that Amazon shares would NOT fall below $1,400 by the March 20 option expiration date in 5 trading days. In other words, it was a bet that (AMZN) wouldn’t fall by more than 313 points from the day I sent out the trade alert. Yes, this was 32% very deep-in-the-money call spread with only a week until expiration.
Here are the specific trades you need to close out this position:
Expiration of 2 March 2020 (AMZN) $1,350 calls at..……$590.90
Expiration of 2 March 2020 (AMZN) $1,400 calls at….….$540.90
Profit: $50.00 – $42.00 = $8.00
(2 X 100 X $8.00) = $1,600 or 19.05% in 5 trading days.