We’re close enough to the upper side of our risk to add.
What you should notice here is that the opex breakeven has tightened up from 391 or so into about 387. That’s because the implied volatility is continuing to fall, which “collapses” the tent a little bit. This is a known risk.
The next trade here is to add some call calendars. I’m biasing this round a little higher since I want all calendars to be equidistant from one another.
Buy to open AMZN Mar/Apr 390 call calendar @4.38
This will cut delta by 50%
raise theta by 60%
raise vega by 50%
and basically double the short gamma.
Breakevens are now 354 and 397.
So what now?
What happens if AMZN continues to rip higher? Not fun, right?
Honestly, it’s quite possible.
The simplest thing to do after that will be to close the 360 calendar and use some of that capital to buy some bull call spreads to hedge the deltas off.
For a past example, check out this triple calendar trade in AAPL from last year.