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Home › Forums › Trading Earnings Live › Upside Bet on AMZN
ATM straddle going for 52.40. That means the market is pricing in 7% of movement for earnings.
Here’s the past earnings events:
Past earnings events average about 11% of movement.
Trust me, I’d love to be selling vol but the numbers require me to flip it around.
Because AMZN is a big stock on an absolute basis, I’ll be doing an iron butterfly buy:
ET Live Spreads Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
STO | AMZN | 29 Jul 16 | 805 | Call |
BTO | AMZN | 29 Jul 16 | 752.5 | Call |
BTO | AMZN | 29 Jul 16 | 752.5 | Put |
STO | AMZN | 29 Jul 16 | 700 | Put |
Total Debit: | 41.5 |
Here’s the risk profile:
And here are the breakevens on the chart:
Basically you need >45 points of movement after earnings… 6% from these levels on earnings. Considering the minimum move over the past few years has been 6.2% this is a high odds bet.
Trade was an absolulte loser, going to take the loss here while there is still a tiny bit of premium left.
Buy to close AMZN Jul 700 Put @0.01
Buy to close AMZN Jul 805 Call @0.01
Sell to close AMZN Jul 752.50 Straddle @4.58