Trade Alert - (AMZN) November 30, 2020 - BUY
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Tech Alert - Amazon.com, Inc. (AMZN) - BUY
BUY the Amazon.com, Inc. (AMZN) December 2020 $2,940-$2,950 in-the-money vertical BULL call spread at $8.33
Opening Trade
11-30-2020
expiration date: December 18, 2020
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a short-term trade that underlying shares of Amazon (AMZN) will stay above $2,950 by the December 18th expiration date.
I believe Amazon shares will benefit from positive headlines about the domination of their ecommerce business going into the new year.
With AMZN being the e-commerce market share leader, I believe it as the biggest beneficiary of the shelter-at-home trend which we are seeing again with the virus spreading like wildfire across the continental U.S.
About 69% indicated they’d use Amazon the same as they did during the pandemic, which is when Amazon’s demand spiked, while another 15% said they would shop on the site even more.
Of those surveyed, 44% stated that 50%-100% of their holiday shopping had already been completed and mostly done on Amazon.
Amazon has been trending sideways the past month and I am willing to bet that shares will hold up in the short-term through the holiday season and I’m using this short-term dip in shares to execute a deep-in-the-money call spread on Amazon.
This is definitely not grasping for straws – please use limit orders when executing the spread in order to avoid price gouging by the market makers.
Here are the specific trades you need to execute this position:
Buy 12 December 2020 (AMZN) $2,940 calls at………….………$236.48
Sell short 12 December 2020 (AMZN) $2,950 calls at………….$228.15
Net Cost:……..............................………………..…….………..…….....$8.33
Potential Profit: $10 - $8.33= $1.67
(12 X 100 X $1.67) = $2,004 or 20.04% in 19 days
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.