Buy Amazon Stock Now And Make Money?
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Buy Amazon Stock Now And Make Money?

Is Amazon a buy?

As of June 24, 2023, Amazon is currently trading around $130, up over 20% from when I initially wrote this article in June 2022.

At that time, a lot of tech stocks had pulled back by about 50 to 70 percent. 

In that situation, especially because volatility was still extremely high, and you're able to collect significant premium by selling options, I believed that the best thing to do would be to sell a put option with a strike price of about $100 and an expiration of about three to four weeks out.

But what about now? In 2023...

At this moment, with VIX trading in the 12s and 13s (as of late June 2023), you're not going to collect a lot of premium for selling options.

Even so, Amazon is substantially off its all-time high.

It may be worthwhile to sell puts with a strike price of $110 and an expiration of ~1 - 2 months.

When volatility is higher, you can collect a lot more premium for making the same trade.

You can also take ownership of Amazon and participate in the upside of the stock.

By taking ownership of the stock you'll be able to participate in the upside capital appreciation of the stock, however I realize that taking ownership of 100 shares of Amazon stock is not very capital efficient so you can use options to structure the transaction so that it's synthetically long by selling an at the money put and then buying an at the money call option with a 6-month expiration.

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By doing this you can use the premium that you collected by selling the at the money put option to finance the majority of the premium that you'll pay for the at the money call option.

Generally, as said earlier, you'll choose an expiration of around six months so that you'll give yourself enough time to be right.

Is Amazon a Buy?

So, is Amazon a buy?

It depends on whether the market continues to go up - which is not something anyone can predict.

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After falling ~55% off its 52 week high, and then rebounding over 50% off its low, it seems that Amazon has stabilized and may continue to go up.

In any case, Amazon is a solid stock to sell options on.

Is Amazon a good investment for 2023?

Long-run, it probably is.

But, make sure not to use too much leverage or else you may be forced to close the position at an inopportune time.

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Buy Amazon (Conclusion)

Amazon still seems like a good value right now as it's trading well off its all-time highs, even so, it's up over 50% from its recent lows and volatility is trading at its lowest point in ~3.5 years.

Structuring your trades using options is more capital efficient and will likely provide larger gains.

Frequently Asked Questions (FAQs)

What is Amazon trading at?

As of June 25, 2023 Amazon is trading around $130 / share.

Did Amazon recently have a stock split?

In early June 2022, Amazon split 20:1, meaning that every share that was held was split into 20 shares while the price of those shares was reduced by 95%.

What happens if Amazon stock price keeps going down?

If you believe that Amazon will continue to go down in price, then it would be wise to not buy it.

How Can I Learn More About Options Trading?

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Should I Trade Options During a Bear Market?

Yes, if done correctly, then trading options will enhance your returns and allow you to beat the market.

Is Amazon a good buy right now?

Amazon is a decent buy. It's currently trading over 50% off its 52-week low, but it's also trading around 33% off it's all-time high.

Fundamentally, there hasn't been a large material change in the underlying, rather most of the price fluctuations have been due to external, or market factors.

Is now a good time to sell puts on Amazon?

Now is probably not a good time to sell puts on Amazon because volatility, as measured by the VIX, is the lowest it's been in ~3.5 years.

As a result, you'll collect a lot less option premium than usual.

About the Author David Jaffee

I (David Jaffee) help people become consistently profitable traders while minimizing risk. I graduated from an Ivy League University and worked at some of Wall Street's most successful investment banks. Subscribe to my YouTube channel for valuable videos - BestStockStrategy YouTube Channel‚Äč. Finally, if you're looking to Land a Finance Job, then I've put together the best step-by-step course at LandaFinanceJob.com. My personal website is DavidJaffee.com.

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