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Amazon Naked PUT 18APR19 ROI 3.05%

Amazon.com, Inc., doing business as Amazon is a multinational technology company focusing on e-commerce, cloud computing, and artificial intelligence in Seattle, Washington. It is one of the Big Four or “Four Horsemen” of technology along with Google, Apple and Facebook due to its market capitalization, disruptive innovation, brand equity, and hyper-competitive application process. Amazon is the most valuable public company in the world ahead of Apple and Alphabet. It is the largest e-commerce marketplace and cloud computing platform in the world as measured by revenue and market capitalization. Amazon.com was founded by Jeff Bezos on July 5, 1994, and started as an online bookstore but later diversified to sell video downloads/streaming, MP3 downloads/streaming, audiobook downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewelry.

The company also owns a publishing arm, Amazon Publishing, a film and television studio, Amazon Studios, produces consumer electronics lines including Kindle e-readers, Fire tablets, Fire TV, and Echo devices, and is the world’s largest provider of cloud infrastructure services (IaaS and PaaS) through its AWS subsidiary. Amazon has separate retail websites for some countries and also offers international shipping of some of its products to certain other countries. 100 million people subscribe to Amazon Prime. Amazon is the largest Internet company by revenue in the world and the second largest employer in the United States. In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization. In 2017, Amazon acquired Whole Foods Market for $13.4 billion, which vastly increased Amazon’s presence as a brick-and-mortar retailer. The acquisition was interpreted by some as a direct attempt to challenge Walmart’s traditional retail stores.

  • Ticker: AMZN
  • Time: Feb. 1, 19 @11:01:30
  • Expiration Date: 18 APR 19 (75)
  • Implied Volatility: 31.25%
  • Strike & Type: 1460 PUT
  • Premium Per Contract: $4,487
  • Targeted Price Entry: 1535.79
  • Targeted Price Exit: 1613.05
  • Projected ROI: 3.05%
  • Projected Annualized ROI: 15.75%
  • Minimum Cost Basis: $141,675.00

Strategy Overview

Using the technical’s RSI and MACD, along with TTM, it is viewed that Amazon will see a drop and the listed entry price will be the target. The IV is only at 31.25% and the adjustment to capture more premium is the listed Targeted Price Entry.  The financial strength of Amazon is still strong, however, the overview is the question of how much longer can Amazon grow. This strategy is using a conservative method and looking to exit once 40% to 50% of profit is captured. The exit will be evaluated at that point to determine whether or not the position will then remain open using RSI, MACD, and TTM to forecast future movement upward and away from the strike price.

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