New Options Trading For Amazon.com Inc
As the first week of May 31st options trading for Amazon.com Inc (AMZN) unfolded, investors found themselves facing new and intriguing prospects. The unveiling of fresh May 31st contracts brought forth a moment of decision-making. The arrival of these options ushered in a wave of opportunities for traders, tempting them to navigate the unpredictable waters of the stock market.
Exploring Put Contracts: A Risky Business
In the realm of put contracts, one particular option at the $160.00 strike price caught the eyes of many. With a current bid of $1.00, the allure of this contract lies in the commitment to purchase the stock at $160.00. However, this commitment comes with a silver lining – the privilege to collect the premium, effectively reducing the cost basis of the shares to $159.00 (before broker commissions). For investors eyeing a stake in AMZN, this can serve as a tantalizing alternative to the current share price of $187.27.
The Call of Covered Calls
On the flip side, the calls side beckons with the call contract at the $190.00 strike price. Boasting a current bid of $8.45, this call provides an enticing opportunity. By purchasing shares at the current market price of $187.27/share and venturing into the realm of covered calls, investors commit to selling the stock at $190.00. This strategic move can yield a total return of 5.97% if the stock is called away at the May 31st expiration. However, the possibility of missing out on substantial gains looms large if AMZN shares soar to unexpected heights. A delicate dance between risk and reward ensues, requiring a keen eye on the historical trading trajectory of Amazon.com Inc.
Unveiling Historical Context
Delving into the historical data, the $160.00 strike for put contracts and the $190.00 strike for call contracts paint a vivid picture against the backdrop of Amazon.com Inc’s trading history. The $160.00 strike, offering a 15% discount to the current trading price, stands as a beacon of potential opportunity. Meanwhile, the $190.00 strike, with its 1% premium, poses a tantalizing challenge for those delving into covered calls. The intricate tapestry of AMZN’s past performance serves as a guiding light in the labyrinth of options trading.
A Glimpse Into Volatility
The implied volatility in the put and call contracts exemplifies the ebb and flow of market sentiment, standing at 38% and 34% respectively. Contrastingly, the actual trailing twelve-month volatility, calculated at 29%, sheds light on the underlying fluctuations in Amazon.com Inc’s stock price. These metrics offer a glimpse into the dynamic nature of options trading, portraying a landscape fraught with risks and rewards.
In Conclusion
As investors navigate the treacherous waters of options trading, the first week of May 31st presented a myriad of choices. From put contracts offering a discounted entry point to covered calls tantalizing with potential gains, the battlefield of AMZN options trading is rife with opportunities. With historical context as their compass and volatility as their adversary, traders must tread cautiously in the quest for profits.
