Sunday, February 20, 2011

Closed out Amazon naked call position for $600 profit

You may recall that back in late December I sold naked call options on Amazon stock as I expected the stock to drop after the Christmas holiday. When I put the trade on Amazon stock traded around $193 per share and the premium I collected for the options I sold was a bit over $800 per option. Amazon stock did in fact drop all the way to the lower $170's. I should have closed out the position then but I got a bit greedy. Nevertheless I bought back the calls in the mid $200 range last week. I made slightly over $600 per call option. If you do not know what I am talking about but are interested in learning I will be writing some educational articles to explain how options work and how investors can take advantage of them to earn income.

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