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Barchart

Mark R. Hake, CFA

Amazon Put Option Premiums Are Worth Shorting Here for Income

Amazon Amazon.com Inc.

Amazon (AMZN) made positive free cash flow (FCF) in Q2 when it announced its results on Aug. 3. It could also have another positive quarter in Q3. However, AMZN stock has been weak lately, pushing up its put option premiums. That makes it ideal to sell short out-of-the-money (OTM) put options in order to gain income.

I discussed the company's free cash flow developments in my Aug. 4 Barchart article, “Amazon Stock Soars as It Returns to Positive Free Cash Flow, But It's Still Cheap.” As a result, I showed how AMZN stock could be worth as much as $173.00 per share based on its positive FCF.

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