Amazon Earnings Trade Ideas
- Posted by Greg Harmon
- on July 26th, 2012
Amazon, $AMZN, leapt higher in April following their last earnings report and has held the gap up consolidating in a broad range between 210 and 230 since. The Relative Strength Index (RSI) is bullish and caught just below the mid line, with a Moving Average Convergence Divergence (MACD) indicator that is negative. Divergence. Support lower is found at 214 and 207 followed by 200 and a gap fill at 196.36. There is resistance higher at 230 and 240 followed by 246.71. The reaction to the last 6 earnings reports has been a move of about 9.3% on average or $20.25 making for an expected range of 198 to 238.50. The at-the money weekly Straddles suggest a $20 move by Expiry tomorrow. Option activity favors the put side.
Trade Idea 1: Sell the August3w 180 Put for $1.05
A move 20% lower will likely be bought.
Trade Idea 2: Sell the Weekly July 205/235 Strangle for $7.70.
A bet it stays in the range.
Trade Idea 3: Sell the Weekly July 205/235 Strangle and buy the August Monthly 205/235 Strangle for $3.50
A bet that the Implied Volatility sucks out of the weekly Strangle and it stays within the range tomorrow.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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