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Friday, May 3, 2019

Options trade: Amazon (AMZN) short put option (bullish)

Wednesday, 5/1/2019 (11:50:31 am, PT)

sell short -1 May 10, 2019  $1880 put option at $6.80

Facts:
  • slow stochastics in "overbought" region
  • this trade was a "hedge" against my short call option
  • 20.32 delta
  • credit received:  $680
  • 9 days 'til expiration (very short-term)
  • FOMC press conference at 11:30 am, PT


Friday, 5/3/2019 (7:26:23 am, PT)

buy back my short put option at $3.00 to protect my profits and remove the risk (of assignment)

PROFIT:  $380 (in 2 days)

Comments:
  • On 5/10/2019 (Expiration), at 8:50 am (PT), Amazon was trading near $1856 and my put option was trading near $24.95!  It's a GOOD thing I closed my trade on 5/3/2019!
  • After some positive comments from the White House (regarding the US/China tariff negotiations), Amazon reversed back up to close at $1889.98 at 1 pm (PT)
  • My short put option would have been fine if I had held it all the way until expiration (1 pm, PT), but who needs the stress?  I was happy to get over 50% of max profit in just two days


CLICK HERE TO LEARN ABOUT PUT-SELLING.