Anyone playing Amazon earnings? (invested, stock, buy, sell)
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Me:
Bought the May $185 put for $5.25.
Sold the weekly $185 put for $3.25.
This structure was recommended on CNBC last week.
The idea is to capture the volatility that will go to zero, if the stock stays above $185.00 by 5pm this Friday, which is tomorrow.
Even if the earnings are good and the stock goes up some, the "weekly" will still expire worthless, and the May $185 put should still make the trade a winner as far as %.
Should the stock go down to $186.00 tomorrow, before a much larger decline over the next 4 weeks, the gains will be far greater.
Most companies are having good earnings.
What will keep the market going once earning season in over, 4thQ GDP is over (April 26th) and April jobs on May 4th is gone.
What will be left to keep the market going.
After hours, Spain was downgraded to BBB+, I think it was.
The Amazon put I sold, is now worth zero.
The one I have for May, the $185 put, may be worth 75 cents tomorrow.
Since the stock is up $30, I must subtract $30 from the $185 strike to see what the $185 might be worth tomorrow.
I had $2.00 per contract invested.
Maybe they are worth .75 tomorrow.
Or, if the earnings was that good, I can pick a price at which I'd like to buy Amazon, 190-195-200, etc. and sell those weekly puts.
So, it is close to impossible for me to lose the $2.00 per contract, when clearly the put spread was the wrong way to go.
But, no one knows the news until ther news is out.
If the May 185 put is worth 75 cents tomorrow, then it lost 86%. However, there were not many people, even the bulls, expecting Amazon to beat by over 400% (28 cents vs. 7 cent estimate)
It's nice to be totally wrong and still not lose.
A bearish bet was to short the stock, or use a put spread.
Clearly the shorts lost their butt in after hours = why to use options in some cases.
What happened to Starbucks? They beat earnings but shares down!
I did not read the Starbucks report. Either sell on the news after a huge rise over the last few weeks, or poor guidance. (??)
Amazon was not up the last few weeks, or even since late January, almost flat, so the blowout gave it a huge lift.
Amazon surpised even the bullish of anaylsts.
What happened to Starbucks? They beat earnings but shares down!
Starbucks was already up close to 30% since late January.
Amazon was up 0% since late January.
Amazon was poised for a rise on a good beat.
Starbucks was poised for sell on the news.
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