Will Amazon (AMZN) Break Higher Into the Year-End?
AMZN is up 74% in the year thus far and looks poised to continue the uptrend. The following two articles highlight some of the reasons investors may continue to push the stock price higher - Cramer's Year-End Game Plan: Load Up On Digital Retailers and Wall Street Analysts Say These 5 Stocks Are A Buy As The World Prepares For The Post-COVID-19 Era.
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Technicals
AMZN has been consolidating sideways within a triangle since the start of September. These types of consolidations often end with an upward break when they are preceded by a strong bullish trend. On a monthly chart, the stock is set to print a bullish reversal candlestick pattern which hints that the uptrend might be restarting. Lastly, as mentioned in one of the articles above, seasonality patterns show that AMZN typically performs well in this part of the year.
*source Tradingview.com
If you agree there's further upside ahead for AMZN, consider this trade which relies on the stock remaining above $3195 through the expiry in six weeks.
Buy To Open AMZN 8JAN21 3190 Puts (AMZN210108P3190)
Sell To Open AMZN 8JAN21 3195 Puts (AMZN210108P3195) for a credit of $2.55 (selling a vertical)
This credit is $0.02 less than the mid-point of the option spread when AMZN was trading near $3195. Unless the stock rallies quickly from here, you should be able to get close to this amount.
Your commission on this trade will be only $1.30 per spread. Each spread would then yield $253.70. This reduces your buying power by $500 and makes your investment $246.30 ($500 – $253.70). If AMZN closes at any price above $3195 on January 8, both options will expire worthless, and your return on the spread would be 103% ($253.70 / $246.30), or 964% annualized.
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Free Report: The Top 5 Stocks That Could Run on the "Second Wave" Pandemic
The pandemic is a "humanitarian disaster," as noted by CNN.
And there's no slowdown in sight, with the virus only getting worse. Meanwhile, health officials are warning of new lockdowns, which is creating big opportunity for several stocks. In fact, here are the top 5 hot stocks to buy and hold immediately for potential double digit returns.
Report Here
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Changes to Investor’s Business Daily (IBD) Top 50 This Week:
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
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Any questions? Email Colin@terrystips.com
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Even better, you can become a Terry’s Tips Insider, and receive all our educational reports and materials absolutely free by opening a new account at the best options broker around - thinkorswim. If you open an account with our link, they will give you 60 days of free trading or up to $600, the same deals they give to everyone who opens an account with them. You must use this link to sign up - open thinkorswim account – and once you have funded your account with at least $3500, email Colin@TerrysTips.com and let him know that you have done it, and this is what he will do – sign you up for our Premium Service package ($97 monthly subscription). You get 1 month of services without paying us one penny.
I look forward to having you on board, and to prospering with you.
Terry
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