The single-largest online retailer has just retested resistance.
And it now looks teed up for a short opportunity worth approximately a 30% price action move.
Recently, this company split their stock as it attempted to become more appealing to investors with smaller account sizes.
That’s right, I’m talking about Amazon.com, Inc. (AMZN).
You see, the era of online buying has changed.
The landscape of what was for the past two years or so is no longer…
Most folks who have held this as part of their portfolio have done extremely well.
After all, this was one of those once-in-a-lifetime buys if you were able to get in early!
But as it sits today, the stock is in an identifiable downtrend, and it’s just settled below a known area of support… A full channel extension.
The Technical Picture
I have created a shorter-term structure for profit-taking purposes.
The idea is to sell this stock short around $106 and buy it back in the upcoming weeks hopefully at the descending $75 target.
Remember… A descending target in a shorting position means the reward grows with time. Let’s take a look at the chart and see how this approximately 30% gain could play out…
The options on this stock are very liquid.
And while a 30% move excites me in the sense of shorting the stock itself, a 30% move on an underlying stock in the options market could end up being very exciting.
So, my thought is to keep it simple and buy a put option.
I would likely look at the AMZN Sept. 16, 2022, $90 strike put option (AMZN220916P00090000) for an opportunity to capitalize on this setup.
And I’d like to pay no more than $4.00 per share, or $400 per contract.
If the underlying stock tests my $75 target expectation, I’d liquidate my position for profits.
That 30% stock move could offer upwards of a 300%+ return on investment from those put options at that level.
Join Us This Afternoon
Before I go, I want to personally invite you to a special presentation with my colleague and expert stock trader Ross Givens.
Ross’s premium Alpha Stocks research service focuses on only the very best stock trading opportunities — both on the long side as stocks rise and on the short side when markets are crashing.
He recently recorded a 21.6% gain on the downside in only eight days as Pegasystems Inc. (PEGA) stock plunged…
As well as a gain of 21.3% in just 15 days in Permian Basin Royalty Trust (PBT) as that stock broke out of its range.
Rules to Live By
“Men are from Earth, women are from Earth. Deal with it.” George Carlin
Until next time, I wish you a beautiful and blessed day!
Yours In Trading Success,
Anthony Speciale Jr.