Motley Fool had a few articles debating the bull/bear case for Amazon (AMZN) yesterday, so I’ll leave that duel to them as I focus on the stock’s chart. A few years ago when AMZN first posted a profit, I jumped in on 200 shares. My account balance was much smaller at the time and I figured 200 shares was worth the risk. I think I got in around $12, after it was up more than a dollar from the open. I had been a fan of AMZN for a while and figured with the profits starting to hit the books I could ride it as it sky rocketed. Well, it jumped, I bragged and then it briefly stumbled. I wrote a covered call at 15 only to see it really take off. It was a huge percentage gain for me in two months, but in the five plus years since my trade AMZN has really shown what it can do as it closed yesterday at 77.30, actually down from its highs from the end of July. I’ve traded options on AMZN one or two times since then and now I’m considering it again.
Based on the attached chart, I’d like to see AMZN come down a little further before I sell a naked put. The premiums are pretty good and even going $7 out-of-the-money (OTM) at the $70 strike I could make a decent return. I think I’ll do better if I wait. On a chart from AMZN’s most recent gap up, I drew three lines, A, B and C that show what could act as some kind of support for it. Then I threw in another think line for what appears to be a new trend line forming. Today will be interesting to see if that line holds.
Line A is drawn using the trend line of higher lows, not counting the big plummet day from last week that still ended in a positive day.
Line B doesn’t ignore that big down day, but starts from the highs before the big jump on May 21st.
Line C starts after the big jump referenced in Line B and is flat. This is the one that could provide the last hope in a fall as it is near other lows seen in late June and early July.
Depending on how AMZN’s price fluctuates today I could see a good entry point as early as next week. Ideally, I’ll be writing a naked put or two at the 65 strike as AMZN bounces off of 69 or 70.
Click on the thumbnail for a full sized chart: 
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