You think Amazon (AMZN) is going to break out above $1,700? Well, here’s your trade! (June 5th, 2018)
AMZN
Look, Amazon ( NASDAQ: AMZN ) is almost up to $1700.00. My bet is, this gets up to $2000.00 before the end of the year; not a real courageous price target. You look at the way the stock is trading, it could be a little bit better but I would be nitpicking, it has been in a really nice little pullback, this consolidation area. and it really was. It is just if you are trading Amazon ( NASDAQ: AMZN ) it doesn’t seem like consolidation, this seemed like a disaster followed by the thrill of victory and then the agony of defeat. It has kind of been all over the place.
If you zoom out and just kind of look at things this was the top. A little triangle here and then this very, very tight squeeze, waiting for the stock to start perking up. Well, it did perk up. So I look at that and how can this not, over the next several months, how can this not jump up to 2000.00? To me, it is just basically about a “lead pipe cinch” only I can’t predict. So don’t pat me on the back if it hits 2000.00 and say, “Hey Dan, great prediction.” No, that is kind of my wild guess but I am using that as a frame of reference for trading this thing.
Here’s the deal: I am talking about call options now. You can go ahead and buy the stock. If it breaks through $1700.00 you are probably going to make some money. But here is what I would do: Assuming that the stock continues to trade higher after it breaks through 1700.00 you can buy the June 15th standard options; you can buy the June 1700.00 calls. Right now they are $21.00, 21.50, something like that, they expire in 10 trading days, 9 trading days tomorrow. So this would have to be a quick trade. The fade on these is about $1.00 a day and I am sure it will be even more tomorrow.
But, you have to be correct, not just about the breakout above 1700.00, that is easy; set an alert and if it is triggered you were right, but the stock has to continue to move. My bet is that those $1700.00 calls that you bought, you would probably be buying them around $22.00 or so, you would probably get $3.00 or $4.00 out of them without too much difficulty; possibly more but again, now I would be predicting.
I would just say, your trade here is coming out of a squeeze. It needs to break through $1700.00. It wasn’t able to do it this is where supply was. All in the afternoon the stock could hardly get to $1700.00 and so this is where the supply is. In order for this trade to have any kind of possibility of profiting at all it has to break through 1700.00 and then stay there. It can’t just be a “fakeout”, it has to stay there. And then I think those 1700.00 calls are going to pay off well.
Free Chart