Bloomberg TV: How to Play Amazon Ahead of Earnings

  • Trade: Risk Reversal

  • Sell AMZN June 21, 2019 $1700 Put for $132

  • Buy AMZN June 21, 2019 $1860 Call for $207

  • Total Trade Costs $75

Kevin Kelly, Benchmark Investments managing partner, discusses his Amazon (AMZN) options strategy with Bloomberg’s Julie Hyman on “Bloomberg Markets,” after his two previous Amazon trades worked in his favor. The previous risk reversal trades results were:

Date: 9-26-17
Cost: $48
Now Worth: $895
Return: 1765%

Date: 1-9-18
Cost: $112
Now Worth: $590
Return: 427%
Link Here: Bloomberg TV- Options Strategy for Amazon

Now, Mr. Kelly is back for a third risk reversal trade to position ahead of earnings on Thursday.  He notes that the implied volatility is higher this earnings season at 32% and the implied stock move would be 5.88% this quarter versus the average move of 4%.

The two catalysts to be long Amazon into earnings are the cloud and advertising businesses.  Amazon boasts a gigantic pool of data, not just likes and habits, but actual purchases which can be used to grow their advertising business to increase profits and margins.

2018-07-27T09:48:44-04:00