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Tim Biggam's Amazon Options Trade

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

Posted-In: Bloomberg Markets Tim BiggamOptions Markets Media

 

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