Amazon: Sell Options For A Potential 11% Discount And 8.8% Yield

Summary:

• The market looks very expensive; thus, we’ve reduced exposure and raised cash to deploy strategically.
• Amazon’s Q3 results were strong, with EPS of $1.43 and revenues of ~$159 billion, showcasing robust execution.
• Selling AMZN put options offers an 8.8% annualized cash yield and the potential to buy shares at an 11% discount.
• Despite risks, this trade provides a great way to put capital to work, and a solid potential entry point into an excellent company.

A few days ago, we published an article titled “3 Key Indicators Flashing A ‘Red Alert’ Warning For The Market“.

While we ended up rating the large market indices like SPX, DJI and NDX a ‘

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in AMZN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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