Amazon's 20 for 1 Stock Split Will Make It Easier For Individuals To Sell AMZN Covered Calls, Puts
The strategy is simple. Pick good under valued dividend stocks. We pick stocks with active and liquid options that can be used to generate income by selling covered calls and puts.
By Donald E. L. Johnson
Cautious Speculator
AMZN’s 20 for 1 stock split will make it easier to trade its options.
Stock splits don’t increase a stock’s value.
AMZN is correcting.
Amazon (AMZN) shareholders will vote at the company’s May 25 annual meeting on splitting its stock 20 shares for every $2,785.58 share. Stock splits do not affect a stock’s value, but AMZN jumped about 6% on the news because the split will bring a lot of new investors into the stock.
AMZN is correcting as this bearish chart shows:
AMZN has very active and liquid options. Each call and puts option is for 100 shares, or $278,558 per share. While a lot of institutions trade multiples of that amount of money, few individuals can or want to put that much money into one covered calls or puts trade.
After the split, AMZN will be about $139 per share, or about $13,900 per option. A lot more people can trade several hundred shares of a $139 stock.
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Home Page. See previous articles on other stocks and watch lists. If you read several of these articles, you’ll learn how this strategy is meant to work. No guarantees.
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A video on how to place options trades on Think or Swim.
Beware
Like all investing, trading stocks and options is risky. If you can’t sleep with market risks, you might want to let someone else do your trading. Consider an option trading ETF like XYLD, which I own. I also trade its calls and puts. I’m an active private speculator who trades covered calls and sells puts on stocks for my accounts. I am not a professional analyst nor a financial advisor. I don't take and won't take responsibility for how other people trade. This article is for educational purposes only. It is not advice. The data presented looked accurate at publication time except for intra-day fluctuations, but I can’t guarantee the accuracy. Traders should do their due diligence. I reserve the right to trade any of the listed stocks and options at any time. I don’t have any positions in NEM or XLE. I don’t own AMZN or its options. I have no business relationships with AMZN other than being a long-time customer, and I receive no compensation for producing this content.
@realDonJohnson. Because I don’t want to litter subscribers’ in boxes with emails, I write only one or two newsletters a day. I’m active most days on twitter where I tweet about stocks, options trades and other topics.