Traders should exercise a bearish bias until the stock achieves the 285.61 correction target shown — a high-probability number, from the looks of this chart. If and when AMZN gets there, we’ll look to leg on some ‘free’ out-of-the-money call spreads, since a strong rally from that low seems like a good bet. _______ UPDATE (August 18, 2:35 a.m. EDT): ): The stock overshot the target by nearly $1 on Friday, implying it is headed still lower — specifically, to at least 283.33, the midpoint pivot of the pattern shown. If that support gives way easily, this correction could come down to as low as 278.34, the ‘d’ sibling. Considering the foregoing, there is no urgency about staking out a bullish spread position. If you’ve already gotten a leg on, I’d use a stop that risks no more than 0.05 to 0.10 theoretical per call option. _______ UPDATE (August 19, 2:07 a.m. EDT): In Sunday night trading, DaBoyz seem to be respecting Friday’s low, although no countermove of substance has materialized. It suggests AMZN will act like a ‘market stock’ on the opening. If that begets a gap-up opening, I’d suggest blowing out half of your calls then. One way to do this that will allow you to get filled at whatever greedy offer obtains is to offer the calls to close slightly above Friday’s settlement price. If the market makers want more for them, your limit order will fill at their rip-off price. Otherwise, use the tight stop-loss suggested above to exit. _______ UPDATE (August 19, 7:11 p.m. EDT): Since no one even mentioned AMZN in the chat room, I’ll assume no position is held. The fact that Monday’s lows exceeded such a clear target by more than $1 is bearish on its face, notwithstanding the fact that shorts obviously are caught in the ringer.
