http://stockoftheday.blogspot.com/2005/10/detailed-count-on-amzn.html
Let's go through the forecast again, and ad an update to the short-term chart OK?
The entire historical record of AMZN is a double 3, currently in its wave (Y) with a target anywhere between 55.61 and 205.
Looking at wave "(Y)" in more detail, we can place our target to between 80 and 120 by Feb 2007.
But the earnings report caused a major setback in our projection. The correction took AMZN back to the high 30's to complete wave "X".
With today's jump, "X" may be over and "Y" may be now in progress. Let's take a look at the forecast including today's data and see if wave C of "X" completed on the third day after earnings:
I am afraid that "X" is not concluded, as indicated by current RET counts. It seems that is actually becoming more complex, as its wave "B" is still in progress. A "C" wave of "X" has not yet formed.
It may appear that AMZN will once again test the highs and then decline strongly. Given the circumstances, RET would appear to negate the call for a rally on AMZN in the intermediate term, and one would have to exit any bullish trades shortly, as the stock reaches the recent highs again.
10 comments:
Great report. I had three positions in AMZN going into today and now I have two. I had some Jan 45 calls, some Jan 37.5 calls and I'm still holding those. In the dip I'd added a position of long April 40, short December 40 in a 2:1 ratio. I closed that position today very favorably. I am not profitable on the other two and was holding them waiting for profitability but I can see the stock is not strong going into the close today so I will take the smaller losses in those positions if necessary. Your comments are very helpful.
Just looking for the info on the trade... I sold 20 Dec 40's on 11/2/05 at $2.55 and bought 40 April 40 calls at $4.95 on 11/2/05. I bought back the 20 Dec 40's at $5.70 today and sold the 40 April 40's at $7.80 today. This is a net profit after commissions of $4,966.47. This is greater than the losses in the other two positions, so I could sell them now and still be overall profitable.
The other positions aren't hedged. I was thinking that it makes no sense to sell calls against the 37.5 Jan strike because it's so far in the money, but maybe it does and I don't understand it well enough? I thought selling some Dec 45's against the Jan 45's might make more sense. Would you say to consider doing that or just close both positions at this point? All thoughts welcome. I have 20 long Jan 45's and 10 long Jan 37.5's.
I have some rules of thumb when it comes to shorting calls.
1. They must bring you more than 50¢/share, otherwise it is not worth it.
2. They must be at the same strike price as the longs, otherwise you will have cash requierement, that you'd need to check on. Cash requirements in some credit spreads have the same effect as a debit, because you cannot use that cash on other trades, and you ARE putting it at risk.
3. If your short for december is less than 50¢, you could consider selling january calls.
Since you are considering selling AMZN Dec 37.5, you WILL be taking profits (so-to-speak).
If you have platinum, enter the proposed trade (with your original costs) and see what you get. If you don't have Platinum, let us know the details of your trade, like when did you enter them and what was the price of your longs, and the number of contracts. Do the same with the short, and I will post a risk graph for you.
BTW, I received a notice of a piece of software that does risk graphs in Excel, if anyone is interested, send me an e-mail.
I'm not short anything now. I'm just LONG Jan 45 and Jan 37.5 calls and deciding whether to sell some Dec shorts against one or both or whether to just close the long positions at a loss. I can get 1.6-1.7 against the 45's and can get 7.2-7.4 against the 37.5s. What do you think? I could just close the long positions, take the losses in them or could just hold them to wait for the stock to go up more, or I could sell December calls against them.
Also, AAPL had another alltime high today though fell back and didn't close that well. Might be time for a review soon? Still looks strong to me, but I'm no Elliotician. :)
As long as AAPL is making new highs, keep on holding your position. If it jumps one day, way high, you should sell some calls (front month) as a way to take profits (nothing wrong with that).
If AAPL makes a double top, then exit your position.
Juan: Thanks. I'm currently on 2:1 ratio on AAPL long, so don't want to sell too many more calls but will sell some on the next runup. Glad you reminded me and also to watch for the double top.
Mailed you more data on the AMZN problem. THANKS!
On AMZN I ended up selling 10 December 45 calls for $2 to offset the 20 Jan 45 calls. That's settled. I'll probably just sell the Jan 37.5 positiion later today if the stock goes up another half point or so.
Sold the January 37.5 calls for 9, and now am just holding the 20 Jan 45 calls long and 10 December 45 calls short. This is a smaller position, and reflects the fact that the chart is less bullish. If I have the opportunity to close this for a small profit I may take it. Right now, it's showing a loss. If not for having added that CRC at strike 40 I'd really be in trouble with this AMZN trading but if I end up with small losses in the other parts, that part kind of bailed me out.
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