A diary of one pessimist's journey to learn financial markets.

Wednesday, March 09, 2011

Buy AMZN for 67.50?

Amazon (AMZN) closed today at 169.

I am looking at buying LEAPS, and in particular, LEAPS verticals:

BUY +1 VERTICAL AMZN 100 JAN 13 180/220 CALL @13.50 LMT GTC
Break Even Stock Prices 193.50
Max Profit $2,650.00
Max Loss $1,350.00 (not including possible dividend risk)
Cost of Trade including commissions $1,350.00 + $5.90 = $1,355.90

The net delta of the position today is .20 (like owning 20 shares of AMZN), so in a way my per-share cost is $1,350.00 divided by 20 = 67.50. And ideally in late 2012 AMZN is above 193 and the spread is profitable.

Update March 10, 2011
In the morning this filled @ 12.65, and the net delta today is 18. So it's like getting AMZN for 1265 + 6 commission = 1271 / 18 = 70.61

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