abooz, Since you seem new to options, I'm going to answer your question directly rather than commenting on what I think of AMZN. You need to pick a put's expiration date and strike price. The strike price is the price you believe AMZN will go below and the expiration date is the date that this needs to happen by. If the price of AMZN is above the strike on expiration day, the option becomes worthless. Naturally you might think, "I'll buy the furthest away expiration that's available" and that would be logical, but the further out an option's expiration, the higher its price. So to avoid over paying, you need to weigh the associated risks with respect to how likely it is for the price to drop below the strike by a particular expiration and that expiration's cost. If paying extra to buy yourself more time makes sense to you given the prices and likeliehood of a price drop, then that's what you'd do. In simple terms, you can consider an option's price as containing a time component. This is why an option with a further away expiration is more expensive, but this also means that each day that passes, the option loses value (the price goes down) because you are getting closer to expiration. So if all else remains equal re AMZN's stock, that option is going to decrease in value each day that passes due to the decaying time value. The second choice you need to make is the strike price. This is the price that you want AMZN to go below -- you profit if the price of AMZN goes below the strike (minus commissions and cost to buy the put). Naturally you might think, "I'll buy the highest put available" and that too would be logical, but the higher the strike, the more expensive the put. Because you think there's going to be a quite substantial drop, you could buy a put that is further away from the current stock price and get the put option for a substantial discount compared to a put that is close to the current stock price. The down side of buying a strike that's lower is that there's less chance for profit and if the price does plummet, you'll make less profit -- but there's less risk (ie cost to buy the option). You need to weigh the above decisions based on where you think the price of AMZN will be and when it will get there. The third item to consider is volatility. As a stock's price becomes more volatile, the price of options go up. You may be able to get a better price when buying the option if you buy at a time when implied volatility is low. It's also possible that after you buy the option that AMZN's price will go against you (up), but if volatility increases it's possible that your option will actually increase in value such that it's profitable. There are many details that affect the price of an option and before actually doing an options trade, I'd recommend that you familiarize yourself with the commonly discussed details so you have a better idea of the risks involved. What I outlined is merely the basics of how to choose which particular put to buy based on your analysis of the underlying stock. I am not suggesting you actually trade options because it seems you've not sufficiently researched options in the first place or you wouldn't have asked the question. A sort of side note so you understand the sort of prices you're looking at to do this: A put option with a strike price of $650 and expiration of January 2019 last traded at roughly $44, however this option will not cost you $44 + commissions (I'm going to ignore commissions from here). 1 options contract is for 100 shares. The prices quoted are the per share price, but if you were to buy this, the actual cost would be $44*100 = $4400. That said if the price of AMZN dropped to $500/share, you'd make 100*($650 (strike price) - $500 (stock price)) - $4400 (price paid for put option) = $10600. So this particular bet -- that AMZN will drop to $500/share by January 2019 has a max payoff of $10600 but it costs $4400 to make that bet. Lowering the strike will reduce the cost of the bet, but also reduce the max possible payoff. Raising the strike will raise the cost, but increase the max possible payoff. Good luck with whatever choice you make.
In case it wasn't clear -- my recommendation is to stay out of options because you don't seem to have a good grasp of them. This recommendation is completely independent of your choice to buy a put, that you chose AMZN as your underlying, what I think of AMZN (the company) or what I think of AMZN (the stock). My recommendation would be the same no matter your choice of company. I provided the information in my previous post because I believe if someone has their mind set to do something that they'll do it. It's better to inform someone of what they're getting in to and hope they'll make a better decision than to let someone go off in to uncharted territory and get lost.
Thanks Lee-, I read your previous article and the volatility part is the one i have ignored when i was going through the put prices of AMZN. Common sense is I chose the furthest expiry date and highest strike price. Now i need to do a balancing of these 3 factors to get the best put for the trade. Appreciate the lengthy explanation. Many other people that replied in this forum are more interested in telling me why I'm not smart for the simple reason that I don't see AMZN with the same view as theirs. Sigh. There are still good and caring people like you, god is great. Thanks