🔒 Premium Membership Positions - September 25, 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 up.

AMZN Bear Call Spreads

SPY:

AMZN:

Given the massive sell-off in the S&P500, I have a bit of a hunch there may be some short-term bounce off of the $361 support line. However, if the index breaks and stays below the support, I will be inclined to set up bear call spreads on AMZN.

AMZN's next critical support line is around $101 with a potential resistance line at around $125 and $129.

Also be mindful that earnings are coming up in October. If you are not comfortable with the volatility, you can sit this one out.

Expiration Date: October 21, 2022

Step 1: Buy 1 $145 strike call option (delta 0.03) for $14.

Step 2: Sell 1 $130 strike call option (delta 0.14) for $81.

Step 3: Set up a buy stop order for 100 shares for $129 to cover

Credit received: $81 - $14 = $67 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.