Great recap! I agree, it doesn't feel too rewarding to beat the game while it's on easy mode, but seeing abundant increases in net worth is something I can get used to in the meantime. Looking forward to see more of what 2024 has to offer and what we can do with it. Cheers!
Hi James! Curious if you also play your weekly best idea or you just focused on holding one or two core positions and ride them all the way? Also, for people looking to potentially play a similar trade on AMZN - what option strategy would you recommend rather than selling puts to fund the long calls? Thanks again and congrats on nice returns!
1) Previously, before I went all in Amazon last May after I wrote that post you can see in May 15-18 somewhere in the archives, its called why amazon is a generational buy, before then, I had 20-30 positions on daily in the recaps I'd post my whole open book. When I wrote that piece I explained why I thought leaps on Amazon were a once in a lifetime opportunity, I've done nothing since and Im up something like 150% since. So it has worked out quite well, at some point I will sell Amazon leaps and go back to trading every day, but that time isn't here with amazon on the cusp of a new all time, we're 8 dollars way.
2) It's so hard to suggest playing a name like Amazon up 50% since October, it was 119 in October, it's 180 today. Do I still love it? Yes I do, but I have this huge margin of safety now where if it fell 15% lets say, I would still be up a ton, its tough to say run and grab it today after such a run. The reason I always suggest risk reversals is bc there is always a level on a chart where a name has support, that is where you want to go long, it may not come, that's why I use the proceeds from that to buy upside calls. It's one of those ok the stock is 180 but I don't mind going long at 160, but if it doesn't get there, cool, the calls are working. The whole point of combining the 2 is to lower your risk profile so to speak, you don't pay the current price, but you have calls should it fly higher and if the trade works the short puts work and the long calls work BUT should the trade not work, the calls were free and now you can buy the stock lower at support.
Hope that helped. Risk reversals sound complex but they're not, they're a tad more advanced than what beginners use, but they're just designed to up your probabilities of success.
Totally appreciate the rundown, James! You've really clarified why risk reversals are a go-to, especially for those stocks that have shot up. The thing I'm wrestling with is the amount of buying power or cash I need to set aside for the chance of getting assigned—the % ROI even if the stock goes up by a lot is quite low, like single digit. I mean, while the return on the entry cost looks attractive for risk reversals, when you factor in the total capital that could be tied up, the overall ROI seems a tad underwhelming. However, yup - I found the discord to be helpful and continue to learning a tons from you and everyone.
It’s hard bc I try to post trade ideas that have the highest probability of success. I admittedly don’t do a good job thinking about margin bc I’m thinking in terms of what I’d place and that is not really a thought that crosses my mind. For your question I think the current trades channel in the discord is best bc so many great people who can help you come up with a better plan. I wouldn’t call the returns underwhelming haha they’re very good returns on so many of these if you look back through the last say year of best ideas someone told me the other day my Spotify risk reversal was up a few hundred percent
also the welcome email you got when you signed up, there's a link to the community discord, there's a current trades channel so many others post their trades in. There's countless channels to discuss other topics, there's 700 or so people in there, but more importantly there's a questions tab where you can ask questions and ill answer them for you whenever you want or others, there's lots of professional traders I know I've invited in there. It's a great place to learn/ask questions
I have been subscribing since about the start of this year, and really appreciate some of these longer writeups about your process, as well as the daily updates. I was thinking that this year, since (as you say) everything has gone up, it almost doesn’t matter which names you sell puts on, ie if instead of selling puts on the daily picks you just sold puts on s&p, you might have had similar returns. In other environments have you seen more differentiation between single name and index option flow as signals? Or can you use single name flow to time/select index or etf option trades? Relatedly I was wondering how you think about your total risk exposure, ie if you are short a lot of puts and risk getting assigned on a correlated sell off, even if you like the names at those prices, it may be more capital than you have available, isn’t it? Thank you.
Here is the thing, charts never lie. If you stick to the etf and names that show nice charts combined with option flow and focus on selling puts into strength, lower, you will always do well. There is always something being bought. When the market goes down it’s usually bc tech goes down and tech basically drives the market, so when charts break you just avoid tech. I’ve written a post somewhere in the past showing how every big market correction is simple to see as a trend simply breaks and when that 21 ema fails you move aside or sell calls or deleverage whatever you want
Hi James, I’m definitely learning all of your wonderful articles and especially this article. Two questions, please:
1. When you sold the short 900 January 2025 calls at $240 and 400 of the June 2026 calls at $260 to purchase the 1,300 $170 long calls -- was that because you wanted to have the short call credit to cover some of your long call purchases?
Is it like the same thing you mentioned in your "Amazon Stock:Something Rare Is About To Happen" article on March 24 example: Sell the June 2026 160 put for $18.50 x 2 so $37 in credit and buy the June 2026 $200 call for $33.20. This trade pays you $3.80 to put on. Why? Because you’re getting $37 in credit and spending $33.20 in debit to sell the 2x1?
2. If Amazon hits $230 this summer, for example, would you roll up the short January 2025 calls or close out?
1. I could have just sold those and kept the money, but bc I thought Amazon was so undervalued I used the rest to buy more calls and press it, but it could have been to initial basis reduction if I wanted.
2. If Amazon hit 230 this summer, I would do nothing, I have till 240, at 240 I would let it go till I got a long term gain and I would close out those 900 and keep the other 400. I'm not a greedy pig at 240, I would be up a fortune, hell I might just refund everyone and retire again at 240 this summer lol
James, when you say joking "I'm not a greedy pig at 240, I would be up a fortune," it's because your 1,300 long calls at $170 is up so much and that even if you close the January 2024 $240 short calls at a loss, you still be up so much on the long calls?
I apologize for the newbie questions, but with sincerely I'm trying to learn. Your articles and thoughts are so different then what I read on X or watch on YouTube.
Look I paid $28 for my 170 calls, at 240, they're worth $70 assuming all the premium has come out by expiration. That's a massive gain for one year. Could I roll them up, sure? But why, there's always other trades, if 900 calls go from 28 to 70 that is a very large return, the short calls you don't have to close for a loss, you can hold to expiry and close then.
James, you’re a superstar. Much respect.
Thanks vipul have a good weekend
Great recap! I agree, it doesn't feel too rewarding to beat the game while it's on easy mode, but seeing abundant increases in net worth is something I can get used to in the meantime. Looking forward to see more of what 2024 has to offer and what we can do with it. Cheers!
Easy mode I like that! Have a good one rob
Hi all, new here. Is there a Discord as well is u subscribed?
Yes the link is in the welcome email you received when you signed up.
Hi James! Curious if you also play your weekly best idea or you just focused on holding one or two core positions and ride them all the way? Also, for people looking to potentially play a similar trade on AMZN - what option strategy would you recommend rather than selling puts to fund the long calls? Thanks again and congrats on nice returns!
Hey Kelly,
1) Previously, before I went all in Amazon last May after I wrote that post you can see in May 15-18 somewhere in the archives, its called why amazon is a generational buy, before then, I had 20-30 positions on daily in the recaps I'd post my whole open book. When I wrote that piece I explained why I thought leaps on Amazon were a once in a lifetime opportunity, I've done nothing since and Im up something like 150% since. So it has worked out quite well, at some point I will sell Amazon leaps and go back to trading every day, but that time isn't here with amazon on the cusp of a new all time, we're 8 dollars way.
2) It's so hard to suggest playing a name like Amazon up 50% since October, it was 119 in October, it's 180 today. Do I still love it? Yes I do, but I have this huge margin of safety now where if it fell 15% lets say, I would still be up a ton, its tough to say run and grab it today after such a run. The reason I always suggest risk reversals is bc there is always a level on a chart where a name has support, that is where you want to go long, it may not come, that's why I use the proceeds from that to buy upside calls. It's one of those ok the stock is 180 but I don't mind going long at 160, but if it doesn't get there, cool, the calls are working. The whole point of combining the 2 is to lower your risk profile so to speak, you don't pay the current price, but you have calls should it fly higher and if the trade works the short puts work and the long calls work BUT should the trade not work, the calls were free and now you can buy the stock lower at support.
Hope that helped. Risk reversals sound complex but they're not, they're a tad more advanced than what beginners use, but they're just designed to up your probabilities of success.
Totally appreciate the rundown, James! You've really clarified why risk reversals are a go-to, especially for those stocks that have shot up. The thing I'm wrestling with is the amount of buying power or cash I need to set aside for the chance of getting assigned—the % ROI even if the stock goes up by a lot is quite low, like single digit. I mean, while the return on the entry cost looks attractive for risk reversals, when you factor in the total capital that could be tied up, the overall ROI seems a tad underwhelming. However, yup - I found the discord to be helpful and continue to learning a tons from you and everyone.
It’s hard bc I try to post trade ideas that have the highest probability of success. I admittedly don’t do a good job thinking about margin bc I’m thinking in terms of what I’d place and that is not really a thought that crosses my mind. For your question I think the current trades channel in the discord is best bc so many great people who can help you come up with a better plan. I wouldn’t call the returns underwhelming haha they’re very good returns on so many of these if you look back through the last say year of best ideas someone told me the other day my Spotify risk reversal was up a few hundred percent
also the welcome email you got when you signed up, there's a link to the community discord, there's a current trades channel so many others post their trades in. There's countless channels to discuss other topics, there's 700 or so people in there, but more importantly there's a questions tab where you can ask questions and ill answer them for you whenever you want or others, there's lots of professional traders I know I've invited in there. It's a great place to learn/ask questions
I have been subscribing since about the start of this year, and really appreciate some of these longer writeups about your process, as well as the daily updates. I was thinking that this year, since (as you say) everything has gone up, it almost doesn’t matter which names you sell puts on, ie if instead of selling puts on the daily picks you just sold puts on s&p, you might have had similar returns. In other environments have you seen more differentiation between single name and index option flow as signals? Or can you use single name flow to time/select index or etf option trades? Relatedly I was wondering how you think about your total risk exposure, ie if you are short a lot of puts and risk getting assigned on a correlated sell off, even if you like the names at those prices, it may be more capital than you have available, isn’t it? Thank you.
Here is the thing, charts never lie. If you stick to the etf and names that show nice charts combined with option flow and focus on selling puts into strength, lower, you will always do well. There is always something being bought. When the market goes down it’s usually bc tech goes down and tech basically drives the market, so when charts break you just avoid tech. I’ve written a post somewhere in the past showing how every big market correction is simple to see as a trend simply breaks and when that 21 ema fails you move aside or sell calls or deleverage whatever you want
Hi James, I’m definitely learning all of your wonderful articles and especially this article. Two questions, please:
1. When you sold the short 900 January 2025 calls at $240 and 400 of the June 2026 calls at $260 to purchase the 1,300 $170 long calls -- was that because you wanted to have the short call credit to cover some of your long call purchases?
Is it like the same thing you mentioned in your "Amazon Stock:Something Rare Is About To Happen" article on March 24 example: Sell the June 2026 160 put for $18.50 x 2 so $37 in credit and buy the June 2026 $200 call for $33.20. This trade pays you $3.80 to put on. Why? Because you’re getting $37 in credit and spending $33.20 in debit to sell the 2x1?
2. If Amazon hits $230 this summer, for example, would you roll up the short January 2025 calls or close out?
1. I could have just sold those and kept the money, but bc I thought Amazon was so undervalued I used the rest to buy more calls and press it, but it could have been to initial basis reduction if I wanted.
2. If Amazon hit 230 this summer, I would do nothing, I have till 240, at 240 I would let it go till I got a long term gain and I would close out those 900 and keep the other 400. I'm not a greedy pig at 240, I would be up a fortune, hell I might just refund everyone and retire again at 240 this summer lol
James, when you say joking "I'm not a greedy pig at 240, I would be up a fortune," it's because your 1,300 long calls at $170 is up so much and that even if you close the January 2024 $240 short calls at a loss, you still be up so much on the long calls?
I apologize for the newbie questions, but with sincerely I'm trying to learn. Your articles and thoughts are so different then what I read on X or watch on YouTube.
I think I'm beginning to understand. It is fascinating to learn these things. Thank you.
Look I paid $28 for my 170 calls, at 240, they're worth $70 assuming all the premium has come out by expiration. That's a massive gain for one year. Could I roll them up, sure? But why, there's always other trades, if 900 calls go from 28 to 70 that is a very large return, the short calls you don't have to close for a loss, you can hold to expiry and close then.