🔒 Premium Membership Positions - October 2, 2022

Hi Advanced Traders!

If you recently set up some AMZN bear call spreads, hopefully you were able to close out your positions and lock in your profits.

As always, remember that we typically like to automatically close our profits when our bear call spreads decay to 50-80% of their value.

Again, remember that by setting up bear call spreads, you are willing to purchase shares to cover yourself in case the underlying stock rises.

AMZN Bear Call Spreads

AMZN:

Looking at the technicals, there is an unlikelihood that AMZN will have a 20% increase from $113 to $136 within the next month and a half. Because of this, I've decided to sell my second leg at around the $136 strike with a delta 0.16.

Be mindful that earnings are coming up. If you don't feel comfortable with the volatility, you can sit this one out.

Expiration Date: November 18, 2022

Step 1: Buy 1 $150 strike call option (delta 0.05) for $44.

Step 2: Sell 1 $136 strike call option (delta 0.16) for $138.

Step 3: Set up a buy stop order for 100 shares for $135 to cover

Credit received: $138 - $44 = $94 per spread

All in all, make sure to see if this trade fit your own risk tolerance. You can also tweak some of the numbers around so you feel more comfortable. And of course, you can always practice these trades in a paper trading account to understand the numbers better.

As always, please don't get too greedy. Many of you made thousands of dollars during the downward market in the first half of the year. However, some of you had too many spreads open and weren't able to cover yourselves when we had a reversal back up.

Remember that the markets will eventually go back higher in the long run, so it's important that you prepare yourself when this happens.

Trade responsibly and stay patient!

-Steve and the Call to Leap Team

The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article does not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article.