AMZN Trade Alert: Sell Weekly Put Options

by Michael Shulman | June 6, 2012 10:02 am

AMZN Trade Alert: Sell Weekly Put Options

A few stocks have held up through the European financial crisis and Wall Street’s unfavorable reaction to recent jobs and economic data. Among them is one of the largest and fastest-growing retailers in the world: Amazon.com (NASDAQ:AMZN[1]).

Some investors don’t like owning Amazon shares — the company is growing on the order of 30% plus per year, but profits are anemic[2]. And the Street has a mixed view of the stock, while income investors hate that the company doesn’t pay a dividend.

But income investors can create an Amazon dividend by selling weekly put options.

Right now, AMZN shares are priced around $212. The stock, as I said, has held up well, and $205 has been a line in the sand during chaotic days. So, sell this week’s $205 puts. You should get around $1.08-$108 a contract. If they expire worthless, you net about half a percent. While that might not seem like a lot, multiply that by 50 weeks and that is 25% per year.

If this strategy appeals to you, also take a look at Research In Motion (NASDAQ:RIMM[3]). It’s a terrible company, and the stock has collapsed, as well it should.  You could have made a small fortune shorting RIMM with puts, but volatility has created some ridiculous premiums for puts for you to sell.

RIMM shares are just under $10, so you can get a half-percent return selling the June Week One $9 RIMM Puts that expire in a couple of days. This is a pure technical trade — you do no not want to be put the stock — but if you are a chart follower and 50 times a half-percent is to your liking, take a look at RIMM.

For purposes of disclosure, Michael Shulman owns Amazon.com shares.

Michael Shulman is editor of Options Income Blue Print[4]. Learn more about trading weekly options in this free short video[5].

Endnotes:
  1. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  2. the company is growing on the order of 30% plus per year, but profits are anemic: http://www.businessweek.com/news/2012-06-04/u-dot-s-dot-stock-futures-decline-on-concern-of-china-slowdown?r=bloomberg
  3. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  4. Options Income Blue Print: http://optionsincomeblueprint.kajabi.com/fe/13713-my-income-secret-weekly-options
  5. free short video: http://optionsincomeblueprint.kajabi.com/fe/13713-my-income-secret-weekly-options

Source URL: http://investorplace.com/2012/06/amzn-trade-alert-sell-weekly-put-options/
Short URL: http://invstplc.com/1fqqlOZ