On Friday I did a quick post on Amazon AMZN, more specifically on my desire to get short near term…..with the stock at 204.60 (see below) I bought the May 195 Put for .65 With the stock now down 2.5% and 4 days to expiration you can sell the May 190 Put at ~.63 against the May 195. I actually just did this when the stock was 197.50 and sold it at .65
Now I have the May 195/190 put spread on for nothing and if the stock is btwn 195 and 190 on Fridays close I can make up to 5.00, below 190, down 4%, I can make the full 5.00.
I encourage readers to look to spread these sorts of trades out when you get in the money and book some profit or dramatically reduce your risk.
You have essentially taken the home run scenario off the table, but you are now risking nothing to make a very tidy profit if the stock is below 195 on May expiration.
I will look to roll any gains into a June Put Spread.
Original Post here.
See video form Friday’s Option Action: