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David's avatar

James, with the increase leverage would it be fair to say you're more bullish because of the Amazon AI play? Thanks.

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James Bulltard's avatar

no I was always in the camp Amazon should have a bigger market cap than Apple and Microsoft. Those are up near $3T, Amazon is at $1.5T. Amazon to me up to $250 is still probably not valued properly. Now that they're focused on reduction in Capex and all segments are firing on all cylinders they should do well the next couple years

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Russ Abbott's avatar

I'm glad to see that you did that. I originally had some high-strike leaps, which I traded for 135 leaps. I was worried that since OTM Leaps are all premium, one could be left with nothing even if AMZN does reasonably well. As it is, 170 Leaps don't start making a profit until AMZN reaches nearly 200!

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James Bulltard's avatar

Well that’s not really true if it runs to 170 by the summer they will be up a lot. In general I’m still looking for $225-250 long term with $255 being the last Fibonacci extension I see

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Russ Abbott's avatar

It's interesting to see the difference between an option's delta and theta effects. I have a short iron condor in LLY expiring this Friday. Of course, the Put side made money, and the call side lost money. LLY was up more than 1% today. (The Put side made a bit more money than the call side lost.)

What was interesting was how the call side lost money. The short calls made money, and the long calls lost money. That's not what you'ld expect when an underlying goes up! The theta decay was larger than the delta price change. The short calls still have a 75% chance of closing OTM this Friday. If that happens, everything is great.

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James Bulltard's avatar

it happens rapidly when expiration is so close, you're gutsy, LLY can move quick.

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Russ Abbott's avatar

And I've been bitten by it. The options expiring Friday are the only ones I have left. Don't know if I'll try more. What's difficult is the way it went down and stayed down for quite a while. From mid Oct until the end of the year it looked like it was dead. I had no idea why. Then this year all of a sudden ... .

It was a difficult ride! And it doesn't appear in your trending tables. So there was nothing to hang on to. Even today, after the start of the year it's had, no unusual trades. But the GLP-1 drugs seem like miracle drugs.

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James Bulltard's avatar

It’s hard to play options on these $500+ stocks, that’s why Amazon and Google split, it gets the players back in the names

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PanPacific's avatar

Thanks for the transparency James. Was wondering what to do myself with my leaps. This is good for thought!

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James Bulltard's avatar

look this is where I say everyones got a different situation and my situation isn't yours. I just did a closing on a group of rental properties that I will not be doing 1031 exchanges on. Done with single family rentals, so I'm going to have a big gain this year. Now, if this trade goes against me I can close late in the year for a loss that can work for me. So again I'm being extra aggressive because I do believe in it but I also have a large taxable gain that I wouldn't mind offsetting if I'm wrong.

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David's avatar

Appreciate your thoughts, James.

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