Menu

Option trading amazon

5 Comments

option trading amazon

Free yourself from the rigid conduct of tradition and open yourself to the new option of probability. The laws of probability, so true in general, so fallacious in particular. One of the things an option trader must keep in mind is to try to match the option strategy to the situation at hand. All of us at times have had the disconcerting situation of having predicted price correctly, but having structured the trade such that the response of the position to a quick price movement is minimal. The recent availability amazon weekly options has given much more flexibility to traders who wish to exploit rapid price movement. At times, the option Gods smile on us and even provide an opportunity to capture significant profit if price moves a bit or even stays the same. As most traders know, AMZN is extremely liquid and has a very tight and liquid options chain. What may not be as well known to traders is the fact that this equity has an extremely active market in the weekly options series. These attributes form a very attractive scenario for trading quick moves using the weeklies when an appropriate price pattern can be identified. Let us consider a couple of important background pieces of knowledge before looking at the option. Weekly options in AMZN can be traded beginning the Thursday of the week prior to their expiration and they trade until trading closing bell of the Friday of their expiration week. During this nine day lifespan, the extrinsic time premium goes from its maximum value to zero. Time premium on these weekly options will always have vanished when the bell rings Friday afternoon. Traders have very few things which reliably happen. The extraction of time premium is inevitable and I used it to my advantage in structuring this trade. Let us now take a look at the intraday price pattern of AMZN on Friday, July The 5 minute candle chart is displayed below: The horizontal line on the chart represents the opening range breakout in price that began around When I noticed this break out, I began to look at the options board to see what might make sense. Now remember, this break out occurred in a very short term chart, the 5 minute time frame. It was imperative to match the pace of the options trade structure with the time frame from which the pattern developed. I knew that the liquid weekly options had only four remaining hours of life and that, as we discussed above, the time premium must go to zero at the bell. Additionally I knew that another reliable factor was in play- the fact that the at-the-money option strike always contains the most embedded time premium. As it turned out, the at-the-money strike was only a short distance above the current price. The graphical display of this trade is presented below: As the earlier price chart showed, AMZN continued to climb into the afternoon before a small sell off into the bell. I was able to exit the trade for a few pennies less than its maximum value two hours after entering the trade for a total return on capital of An important learning point in this trade is the mechanics of the exit. This sequence of events option a few important points: Having said this, options traders should never be afraid to give a few pennies to exit a trade which has achieved the profit objective. The psychological cost of seeing a successful trade suddenly go to a loss is significant. Take a look at www. This material should not be considered investment advice. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only. Adobe Flash Player version 9 or above is required to play this audio clip. Download the latest version here. Trading also need to have JavaScript enabled in your browser. Amazon no circumstances should any content from this website, articles, videos, seminars or emails from TheTechnicalTraders. Options Trading Signals Making Time Work For You. Home Strategy Premium Service Subscribe AUTOMATED TRADING Trading More FAQ Testimonials Affiliate Program Contact Us. Trading Weekly Options to Extract Profit from Amazon AMZN July 29, by J. JW Jones This material should not be considered investment advice. Audio interview with Amazon. Recent Articles Explaining Gold Options The Fed Taper Explained by SPX Options The Right Steps for Options Trading OTS Performance Has Given You a Happy Thanksgiving — If Not, Join Today Free Fundamentals Rendered Irrelevant by Fed Actions: Probability Based Option Trading.

Bartosiak: Trading Amazon (AMZN) Earnings with Options

Bartosiak: Trading Amazon (AMZN) Earnings with Options option trading amazon

5 thoughts on “Option trading amazon”

  1. adsosda says:

    Corporation and Paul Gilbert and Michel Levis of Quanser for conceiving, coor-.

  2. alaliv says:

    Hi, you were probably passed as this may not be a malware problem.

  3. alex487 says:

    Piece of writing writing is also a fun, if you be acquainted with afterward.

  4. AGGA says:

    Sufficiently diverse single speaker of class, narmadashankar lalshankar dave.

  5. akbe says:

    Fixes bug that may cause an app to crash when using the Japanese Kana keyboard.

Leave a Reply

Your email address will not be published. Required fields are marked *

inserted by FC2 system