Amazon.com (AMZN) has one of the more appealing setups to benefit from should this market continue to bounce as it has today (Make sure to check out my previous post on my market observations from today). With AMZN, you have a stock that has not sold off to the same degree that the market has from its peak, and instead, has done a good job at times, bucking the trend. And right now, despite one of the most turbulent weeks we’ve ever seen in the market, AMZN is holding a major level of support to near perfection – which resides at the $191. 

Once we get that bounce, I think there is a very good chance we see a push back into the $220’s on AMZN. To play this using options, I would target the October 220 Calls that are currently (as of this post) at $6.80. If that is too expensive, you could sell the the $250 calls as well, which will allow you to collect a premium, and lower the price of the trade to $5.30, though your profit potential will be capped off at $250/share. 

If the stock closes below $190, I’d dump the position in its entirety. 

You Might Like

  • Short-term bounce

    The Anatomy of a Short-Term Bounce

  • January Barometer: As January goes, so goes the year.

    January Barometer: As January Goes

  • Losing Trade to Start the New Year

Leave A Comment