4 Trade Ideas for Amazon: Bonus Idea

• Posted by Greg Harmon
• on May 6th, 2024

Here is your Bonus Idea with links to the full Top Ten:

Amazon, $AMZN, comes into the week moving back towards the all-time high. This follows a shallow pullback in April. The RSI reset lower and held in the bullish zone. It is rising again now. The MACD has crossed up and turned positive after a reset lower. There is no resistance above 189.77. Support lower comes at 182.75 and 174.50. Short interest is low under 1%. The stock does not pay a dividend. The company is expected to report earnings next on August 1st after the close.

The May options chain show big open interest at every $5 strike from 185 to 165, biggest at 175 and 170, on the put side. The call side builds form 165 to a peak at 190 then tails lower to 210. The June chain has biggest open interest at the 185 then 170 put strikes and the 200 then 185 call strikes. The July chain has huge slugs of open interest at the 145 then 150 put and spread from 180 to 215 on the call side. Finally in the August chain open interest builds from 200 to a peak at 175 then slowly tails to 140 on the put side. There is a build form 165 to a peak at 210 on the call side.

Amazon, Ticker: $AMZN

Trade Idea 1: Buy the stock on a move over 188 with a stop at 181.50.

Trade Idea 2: Buy the stock on a move over 188 and add a June 182.50/172.50 Put Spread ($2.75) while selling the June 200 Calls ($2.10).

Trade Idea 3: Buy the June/August 200 Call Calendar ($5.35) while selling the July 175 Put ($3.40).

Trade Idea 4: Buy the August 170/195/210 Call Spread Risk Reversal (25 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with April and the May FOMC meeting in the books, saw equity markets show some strength moving higher in a busy week for news.

Elsewhere look for Gold to pullback in its uptrend while Crude Oil pulls back in the long uptrend as well. The US Dollar Index is on the edge of a break out to the upside while US Treasuries pause in their downtrend. The Shanghai Composite looks to continue the short term move higher as it returns from a Labor Day holiday while Emerging Markets with further upside will confirm a new uptrend.

The Volatility Index looks to remain very low making the path easier for equity markets to the upside. Their charts look strong on the longer timeframe. On the shorter timeframe the IWM is leading the way to a reversal higher while both the QQQ and SPY still have some work to do before they are in the clear. Use this information as you prepare for the coming week and trad’em well.

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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.

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