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Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Joe Waynick who wrote (65)	7/25/1998 8:03:00 PM
From: grenouille	Respond to of 355

Joe, Thanks, but a pro I'm not. That's why my positions are so small. But, 400% is 400%! Even if it's only 400% times 3/8. Some day soon hopefully, as my confidence and experience increase, the positions will increase in value and the monetary return will be more significant. Another position I am long is AMZN Aug 110 puts. I purchased these on 7/21 @ $5. Establishing this position was based on analyzing first the historical price chart. The dizzying recent price movement of this issue strongly suggests to me a near-term blow-off. The stock, after basing through much of April and May, started, on June 9, an incredible run with a significant increase in volume. AMZN ran from a close of $46.25 on 6/8 to $139.50 on 7/6!! A 300% run in less than 1 month!!! It paused briefly on 6/24 for a four-day toe-hold (can't really call it a base!) before resuming it's ear-popping ascent. On 7/7 AMZN plummeted 17.375 on heavy volume to close near its low of the day. The next day's trading stripped another 15 points on heavier volume, leaving it panting at 107.125 at the close. Two days later found AMZN at 99.5, right about where it was at it's brief toehold on 6/24, a better than 28% decline in one week. And then, incredibly, it began to reclaim lost ground, although this time with significantly less conviction (read, volume). On 7/20 it closed at 137.50, very near it's previous high (but not quite!) on somewhat stronger volume. It was a wild day, with prices ranging from a low of 119.75 to a high of 140.13. On this day (7/20), the price had not only pierced the upper BB, it had closed above it. Stochastics, although at about 70 with the fast indicator comfortably above the slower and in an moderate uptrend, were still surprisingly flat considering the price movement of the previous few days. RS was about 60, and again, surprisingly flat. It looked to me as though AMZN was about to fall over big-time near-term. Accordingly, on 7/21, I purchased 5 AMZN Aug 110 puts @ $5, pretty cheap I thought, considering the volatility of the stock. I still hold them. I considered closing the position on 7/24 when I closed my ORCL position (I could have gotten $9 for them!!!), but seeing the price still in the upper area of the BB, and Stochastics flattening further with the fast indicator rapidly converging on the slower, and RS at about 60 and beginning to decline - I think it has farther to go. So, as you can imagine, I won't be too far from my computer Monday!! Regards, -Bob W