Advice on Amazon Options

L

Lpw54

I bought Feb $1910 calls a few weeks ago for $55 with the thinking that Amazon would break out. I got nervous before earnings today, and with the market declining lately on the corona virus, I decided to sell the Jan 31 $1945 calls for $9 to take advantage of the elevated vol from earnings with the thought that if the stock pops on a beat, I'd be able to roll out and up to Feb expiry to make this a vertical. And if the stock dropped, at least I'd have a $9 credit.

Of course I wasn't expecting a 10% pop on earnings so I'm not sure if there's enough time premium tomorrow for me to still be able to roll the short call out and up from $1945.

Any advice?
 
There won't be time to do anything substantial that would change the outcome, but at least you seem to be in profit, though you limited it by selling those calls.
Rolling means closing the position and reopening a new one, except maybe saving a few bucks on commissions if you only need to roll some legs and not others, or having some tax considerations.
Generally it may be easier to just close your position tomorrow, calculate the profit, then start a new position so that you can start with an average price of new combo, as well as take fresh look at what you really like to do.
 
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dozu888 said:
sigh.
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Can you translate how this worked out for him? I still cannot fathom this option stuff.

Rolling a short call at 1945 to next expiry? Yer selling someone the ability to buy the stock at 1945 next month, when it is over 2000 now? I kinda' don't get that...
 
Overnight said:
Can you translate how this worked out for him? I still cannot fathom this option stuff.

Rolling a short call at 1945 to next expiry? Yer selling someone the ability to buy the stock at 1945 next month, when it is over 2000 now? I kinda' don't get that...
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I'm assuming this is his current position:
upload_2020-1-30_18-49-40.png
 
Overnight said:
So he can get out of it with profit?

Oh, wait, his calls that he sold expire tomorrow. Eeek.
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Yeah, I'm assuming that both calls will be somewhat deep ITM, so their value should be mainly intrinsic and similar to a simple vertical spread. At least such assumption makes it easier to analyze without knowing their true value tomorrow.
 
guru said:
Yeah, I'm assuming that both calls will be somewhat deep ITM, so their value should be mainly intrinsic and similar to a simple vertical spread. At least such assumption makes it easier to analyze without knowing their true value tomorrow.
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Well, if it makes you feel any better, the post-market closing price of AMZN is 2054.79.

So...That is good, yes?
 
Overnight said:
Well, if it makes you feel any better, the post-market closing price of AMZN is 2054.79.

So...That is good, yes?
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Oh, I didn't realize he paid $55 for those 1910-strike calls minus $9 credit from selling the 1945-strike calls (so the cost is $46). While max he can take will be $35 for the 1910/1945 spread. So actually it seems to be a loss...
(by profit I initially meant not a loss that someone could have when selling naked calls or credit spreads)
 
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