Hi guys, this bull put strategy is from Investor's Business Daily options trading center. Do you think it's a good strategy? "Amazon.com (AMZN) is back above the 21-day and 50-day moving averages after a strong few days. AMZN stock gets high ratings from IBD Stock Checkup, so I'm comfortable being bullish here. The Composite Rating for AMZN stock is 96 and the Earnings Per Share Rating is a best-possible 99. The Relative Strength Rating is only 72, but that has improved in the last week. Implied volatility is 33%, which is lower than a few weeks ago, but still OK in terms of option selling strategies. Traders who think Amazon stock will not drop below the 21-day moving average could look to sell a January 3100 put and buy a January 3090 put. This spread was recently trading for around $3 and would have a maximum risk of $700."
Break-even (3097) is approx. 2.4% lower. Could be there in a day or two. Only a good trade if you're bullish AMZN & equity markets. Wouldn't be for me. .
I have that Put Credit Spread at $1.85 credit - not $3.00. Quotes from Yahoo Finance and TD. IMO ....... Buying the weekly OTM calls is better than a Put Credit Spread. More profit potential and less risk. My preference is Long OTM Calls only. But a OTM Call Debit Spread could also be considered.
Once we broke the major trend form March, we have two competing trends here(Red and Blue). Personally, I feel Amazon has priced in all the benefits it received from the pandemic. I would be surprised if we make new highs on the next few months. AMZN stock is around 60% higher than the closing of 2020. The 'retailer' side of the business has limited upside on the short term in my view. Downside may also be limited on the short term as the vaccination rollout priced in seems waaay to optimistic. Perhaps and short Iron Condor or a strangle fits better.(I have the IC as a position.)