Bloomberg TV: Options Strategy for Amazon

This week Kevin Kelly sat down with Bloomberg TV to discuss Amazon’s options strategy.

Amazon’s is in a battle with Google over virtual assistants with estimates of an addressable market of over 800 million homes for these devices by 2020.  The Amazon dominance in virtual assistants is a huge threat for Google in the advertising market as the trend is likely to see accelerated adoption in consumer-electronics devices as it rapidly becomes the primary mode of input and interaction.

The Consumer Electronic Show is in full swing and Kevin Kelly, Benchmark managing partner, discusses the performance of stocks and his options play for Amazon.com Inc. He speaks with Bloomberg’s Abigail Doolittle on “Bloomberg Markets.” (Source: Bloomberg).

The trade is a play off the September 26, 2017 call here:

– Amazon boasts a gigantic pool of data, not just likes and habits, but actual purchases.

– It could position its ad platform to be the arbiter of what ads work in actually driving people to make purchases — and the one best positioned to target those ads.

– Amazon executives have repeatedly said the company is investing heavily in ad sales teams

– Amazon just announced that it would open a New York office with 2,000 jobs focused mostly on advertising

– Inside the Amazon Media Group service arm, you can see data inside the stores on who was served an ad and who bought in-store

– Amazon could break up the Google-Facebook duopoly

Taking a LEAP (Long Term Equity Anticipation Security) on Amazon:

January 2019 Risk Reversal

Sell the Amazon January of 2019 $875 Put AMZN190118C875 for 76.50

Buy the Amazon January of 2019 $940 Call AMZN190118C940 for $124.50

Costs $48

  • Amazon.com Inc. (AMZN) impacts constituents in the INDS and RTL Indexes

  • Trade: Risk Reversal Redux (same type of trade from 9/26/17)

  • Sell the January 2019 $1000 put (AMZN190118P1000) for $33

  • Buy the January 2019 $1250 Call (AMZN190118C1250) for $145

  • Trade costs $112 for unlimited upside

Click the play button to watch full video below:

2018-05-14T19:30:44-04:00