Friday, March 16, 2012

$AMZN trade profit 1609

2/2: I sold to open Mar $AMZN credit put spread 170/165 1.25.
I did this 13 times and collected a net $1,609.26.

3/16: I decided to let this one expire worthless for maximum profit and got to keep the entire premium in my self-managed IRA.

Lesson in conviction:
This trade sure was critized on twitter by the amzn haters (plenty out there). Though don't care who the company is; all I saw was a stock that got mispriced so I took action.
The stock got punished on shocking news that it was willing to sacrifice margin for market share. Apparantly, this was news to the sellers that week.
So, I jumped in with this spread.

Price at the time of position open was 180.2. Even then I gave myself a decent pad of 5.7%. Further more, I was fairly confident that in case I needed it I could manage the trade to keep my short leg out of the money.

Should the stock had continue to go down, I had options:
1) reset lower within the same period + more lots (ex: close 13x170/65 open 15x160/150 etc.)
2) punt out and up (close Mar13x170/65 open Apr13x140/135 or several other ways)
3) punt out and into an iron condor (allows for much further out of the money cr put spread but then will have a credit call spread too)
4) sprawl into an iron condor in the same period

$AAPL $AMZN $bidu  $SPX $NDX $RUT $C $GS $wynn