Just sold 1 AMZN October 21, 2022 put 109 strike price

S

SoyUnGanador

Collected $2.99 per share, thus $299, premium. So that is about 7 days. $2.99 on a call it $109 investment (even though I'm technically not making the investment, but if I do it will be at $109 so I suppose you have to consider it made). $2.99 for 7 days, then multiply that by 52, to get a yearly premium about of $155.48. That's well over a 100% ROI, like 142%. Now, sure, it is going to get assigned to me many times, but who cares? I'll own some Amazon, which I own none of and would not mind owning more. Heck, then I can sell covered calls on it!

This seems like SO MUCH money in the bank. Am I missing anything here?
 
SoyUnGanador said:
Haha indeed. But to DCA you gotta start small - hence my selling a massive ONE put. :)
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Don't have to start small... just have the market/issue keep declining as you scale in.

Amazon could likely be a good play long term. Not because of their retail business but because of AWS.

AMZN is on my watch list to buy after the "great smashola". FWIW... Citibank traded down to $.95 in 2009. Imagine that... Citibank... a penny stock!
 
I don't trade options so correct me if I'm wrong.
Selling a put means you agree to buy that stock at the strike price.
If AMZN trades at less than 109 0n the 21st you will pay 109 for the stock.
You collected 2.99 so as long as AMZN trades above 106.01 you are OK.
If AMZN trades below 106 you are underwater. IE you will have to pay 109 for a stock you could have bought for less that 106. (Not sure about trading costs)
 
Scataphagos said:
Don't have to start small... just have the market/issue keep declining as you scale in.

Amazon could likely be a good play long term. Not because of their retail business but because of AWS.

AMZN is on my watch list to buy after the "great smashola". FWIW... Citibank traded down to $.95 in 2009. Imagine that... Citibank... a penny stock!
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Yea, I just mean this is an experiment and I don't want to scale in too fast and essentially have to stop selling on further downs because I risk going broke. But very little risk of that given short 7 day expiration so I see your point!

My GOD I wished I had not lost all my money in the 2008 blow up, Citi for under $1, wow. Buying opportunity of a life time. Although, I suspect for most people at that time, they were worried about it going to zero!
 
deaddog said:
I don't trade options so correct me if I'm wrong.
Selling a put means you agree to buy that stock at the strike price.
If AMZN trades at less than 109 0n the 21st you will pay 109 for the stock.
You collected 2.99 so as long as AMZN trades above 106.01 you are OK.
If AMZN trades below 106 you are underwater. IE you will have to pay 109 for a stock you could have bought for less that 106. (Not sure about trading costs)
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Exactly right I think deaddog. Now, its easy to think "wow it could go down to 106 so easy!". And it could. But remember, this is for only a week period, and so next week around this time I'll be selling another one. Then the week after. Then the week after. It cannot keep going down that 3+ points very long. Where I would get burned is if it went down 20 points, then jumped back up right away.
 
SoyUnGanador said:
My GOD I wished I had not lost all my money in the 2008 blow up, Citi for under $1, wow. Buying opportunity of a life time. Although, I suspect for most people at that time, they were worried about it going to zero!
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Yes... but we should all have recognized what the failure of Citibank might mean... actually TBTF, so had to suspect the government would be bailing them out.
 
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