Looking for a trade on Amazon? I’ve got one for you right here. (January 21, 2020)
AMZN
I want to look at Amazon ( NASDAQ: AMZN ) today. I have had these lines drawn here for a while just to kind of help me keep track of what’s happening with the stock. You could see this rising support line; rising resistance line that were actually kind of converging. That lead to some selling, where the price just kind of poured out of the end of this wedge, kind of like water out of a garden hose but it found support here at 1860.00. That’s important because a lot of times you will see a stock fall out like this and just kind of keep going even if it is just to the 50-day moving average. But here, this stock actually held up pretty well.
Now we’ve got earnings coming up on the 30th, that’s in 9 days, which would be, by my count, sometime next week. I see this stock when the rest of the market was, let’s just say, was kind of dicey a little bit today, a lot of stuff kind of turning sideways or selling off, unless you are Tesla ( NASDAQ: TSLA ) or Beyond Meat ( NASDAQ: BYND ). This stock traded right about the same level as it closed on Friday but then it traded higher, really nicely; less than 2 percent, about 1.5 percent so it wasn’t a big move but it was almost $30.00. That’s what happens when you have a stock that is worth almost $2000.00.
So just buying the stock you don’t really get that much of an advantage, it’s just not a big mover. The options are fairly liquid for this stock. You can’t trade them out too far, they are really not but you could even trade weekly options here. Buying a call option on this stock I think can work really well because if the stock breaks out above the January high, around 1918.00 or something, this could easily go to 1950.00 fairly quickly.
I took a position here, it’s a fairly small position, but I just bought some call, the 1885.00 calls, the expire next week. I seriously doubt that I will hold them until Friday, very short-term stuff, and I wouldn’t really hold a short-term option position over a weekend. If this thing starts moving up tomorrow I will add to that position and then maybe at some point I might sell some options against it just to manage my delta, which is how much the actual option position moves relative to a $1.00 position in the stock. But I think there are some good trades to be made on this to the upside.
Another way you could do it would be to sell puts, out of the money puts but those require a little more time and I don’t really want to hold this stock past the weekend. I would sell it before the weekend, like on Friday. And then if I bought it back or did something else on Monday that’s another thing then that II would want to be out of before this company reports earnings because it could go either way. But for the time being, for the purposes of the video, I think you could get long this stock. It would be very, very speculative to buy call options, the real money is made is selling options consistently but every once in awhile and say, “Sure, I will take a flier.”
And that is what I would do on this stock. If it is up tomorrow, we’ll say if it trades above 1892.00. Or we will look at the top here, it’s at 1894.27 so we will say 1895.00. If the stock trades above 1895.00 tomorrow I think you will probably get a really good day trade or a very, very short-term swing trade out of this stock. That’s the way I am playing it.
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