Tim Biggam's Amazon Options Trade

Speaking on Bloomberg Markets, Tim Biggam of Delta Derivatives shared with the viewers his bearish trading idea in Amazon.com, Inc. AMZN.

He said the stock closed higher for eight days in a row, before it lost 1.21 percent on Thursday. He added that its market cap is twice the market cap of Wal-Mart Stores Inc WMT, but it has only 30 percent of Wal-Mart's sales.

Biggam thinks Amazon is overbought and he wants to use options to initiate a bearish position. He wants to buy the April 21, 900 strike put and sell the April 13, 890 strike put. The trading structure would cost him $7.50 and it breaks even at $892.50 or 0.64 percent lower. If the stock trades above $890 at the April 13 expiration, the April 13, 890 strike put is going to expire worthless and Biggam is going to have a chance to earn more than $2.50, which is the maximal amount he can make on the put spread.