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Amazon (AMZN) earnings play #2

In February 2017 I have opened a second earnings play to my previous earnings trade which I haven’t reported here in my blog.

The trade also didn’t work as planned so I rolled it into January 2018 hoping the stock would stay within the boundaries of my Iron Condor. It didn’t.
 

ORIGINAL TRADE: February 2, 2017
 

Originally I opened an Iron Butterfly on Amazon (AMZN as an earnings play with the following strikes:
 

BTO 1 AMZN Feb3 885.00 call
STO 1 AMZN Feb3 845.00 call
STO 1 AMZN Feb3 845.00 put
BTO 1 AMZN Feb3 805.00 put

@ 31.40 credit limit
 

The stock however collapsed after reporting and I had no more time to give to the stock to go back up so I could close for a profit.

I opened the trade on February 2nd, the company reported earnings on February 2nd after the market close, and the expiration was on February 3rd. So I had to roll.
 

UPDATE: February 6, 2017
 

At expiration, on February 3rd, I let the call side expire worthless and I rolled puts as follows:

 

BTC 1 AMZN Feb3 845.00 put
STC 1 AMZN Feb3 805.00 put
BTO 1 AMZN Jan19 790.00 put
STO 1 AMZN Jan19 850.00 put

@ 1.37 debit limit
 

As it was a debit trade, on February 6th I added a call side to the trade:
 

BTO 1 AMZN Jan19 1080.00 call
STO 1 AMZN Jan19 1020.00 call

@ 8.17 credit limit
 

This made the entire roll a profitable roll again. See the overall table below.

 
UPDATE: July 18, 2017
 

The above roll was successful and the stock price was hoovering above 850.00 strike price for a long time, until today. Later Amazon started its strong rally and haven’t stopped since then except a small sell off in June.

Today, as the stock reach 1025.00 a share, I decided to roll again. The reason for rolling was that if the stock continues higher, it would be difficult to roll the calls. So I wanted to roll earlier rather than later.

Remember, here we are trading spreads – Iron Condor – and these are difficult to manage. Once the spread is fully in the money, it may be close to impossible to roll for a credit unlike strangles.
 

And here is the roll again in two steps:

 

STC 1 AMZN Jan19 1080.00 call
BTC 1 AMZN Jan19 1020.00 call
BTO 1 AMZN Jan19 1160.00 call
STO 1 AMZN Jan19 1100.00 call

@ 10.26 debit limit
 

After I rolled my calls, I now rolled the puts side higher to collect enough credit to offset the debit on the call side trade:

 

STC 1 AMZN Jan19 790.00 put
BTC 1 AMZN Jan19 850.00 put
BTO 1 AMZN Jan19 1020.00 put
STO 1 AMZN Jan19 960.00 put

@ 17.60 credit limit
 

The resulting trade is now $730 credit. Below see the overall trade results:
 

Original trade: $3,140.00
February 3rd puts adjustment: -$137.00
February 6th calls addition: $817.00
July 18th calls adjustment: -$1,026.00
July 18th puts adjustment: $1,760.00
TOTAL TRADE BALANCE: $4,554.00

 

Let’s see if the trade can stay positive by January and we will not need to roll again.
 





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