Remember back in May when I shared this post?
Everyone was calling me crazy. “Are you stupid? You can’t bet against Amazon”
At the time, Amazon was just going from strength to strength and taking out rivals left, right and centre.
There was also some really nasty divergence on the long-term charts. So, I took a lottery style trade with the idea that Amazon would pull back to its 200-day moving average.
Stocks never stay above their 200 day moving average forever. Eventually, the stock either goes sideways for an extended period allowing the average to catch up, pulls back to the average or a combination of the two.
My trade thesis was that Amazon was overdue for a touch of the 200 day, and I was spot on with my opinion…….
Unfortunately, I was a few months out with my timing.
My expiry date was June 15th.
Amazon eventually had a 26% pullback and crossed below the 200-day moving average, but it didn’t happen until late October, so timing really is everything in the trading game. ☹
You can learn more about some of the main options strategies I use by downloading the five free books below.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
