Weekend Trader Series
August 11, 2024
Open Positions Update
- Close the PulteGroup (PHM) October 18, 2024, 125-strike call on Monday, August 12. Close the position at a limit price within the range of the current market price when you place the order.
The following is this week's recommendation:
Amazon.com (AMZN)Place a limit order to buy the Amazon.com (AMZN) October 18, 2024 170-strike put at a limit price within range of the current market asked price when you place your order. At the close on Friday, August 9, this option was offered at $9.30. AMZN closed at $166.94 on Friday, August 9.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Tuesday, September 3, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Shares of Amazon.com (AZMN) have rallied into the 200-day moving average this week on low volume. The equity had previously gapped below this trendline on Aug. 2 after earnings, but retail investors that accumulated shares at a major brokerage house between February and July are now underwater.
Amid a negative earnings reaction and technical breakdown, the stock has become vulnerable to downgrades, with an inflated 61 of 63 Street analysts recommending "buy." In the options market, call open interest (OI) is double put OI for options expiring in next three months. Implied volatility (IV) is reasonable, too, coming in at 29%, in line with AMZN’s 63-day historic volatility (HV) reading. Our recommended October 170 put has a leverage ratio of 9.0, and will double on a 9.3% drop in the underlying security.
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