Went a little risky yesterday and decided to play the AMZN earnings, along with my general view that AMZN is overvalued.
I bought 1 AMZN Jan 18 2014 put 250.0 put for 5444.77 after fees.
I sold 1 AMZN July 27 2012 put for 543.21 after fees.
If earnings prove positive, I will keep the 543.21 premium, and take a loss on my long put. If the loss on the long put is substantially less than the kept premium, I will close the position. If the return is negligible, I will take the weekend to consider whether my outlook on Amazon is pessimistic enough to keep the trade open.
If so, I will sell another put on Monday. Since volatility should settle after earnings, I can expect that the put sold on Monday will be less lucrative than this weeks.
If you have questions regarding this trade, and my thought processes, please write me, or review my article at:
Disclosure: I am short AMZN.