Amazon Stock: Capitalize On Downward Trend With This Options Trade
Amazon (AMZN) stock broke through key support levels on Tuesday and has been showing signs of distribution since early September. Amazon has also seen a declining relative strength line during that time frame.
Now, I’m looking at a bear call spread that assumes Amazon will struggle to get back above 240 between now and mid-November. A bear call spread involves selling an out-of-the-money call and buying a further out-of-the-money call.
Assembling An Amazon Bear Call Spread
The strategy can be profitable if the stock trades lower, sideways, and even if it trades slightly higher, as long as it stays below the short call at expiry.
A Nov. 21 expiry bear call spread on Amazon stock using the 240-245 strike prices can be sold for…
