10.12.2006

Option trade

There's a pretty juicy option trade out there on Amazon.com:

Sell the Nov 37.50 calls for 0.80.

Sell the Nov 30 puts for 0.90.

I think Amazon will float in the 30 - 37.50 range for the next month. If it does, you make a nice $170 per contract. If it drops below that, you own Amazon at a net of $28.30. And on the upside, Amazon has to go above $39.20 for you to lose.

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