Investing again…
It took a while but I’m finally back in the market. After selling my house I decided to put aside $5,000 to open a new brokerage account. While OptionsXpress has a LOT of great features their fees are a bit high. I’m keeping $1,000 with them as a backup account and for the tools they provide (free L1 streaming quotes, calculators, market scanners, etc). I put the $5,000 in a ChoiceTrade account. I haven’t decided if I’m going to stay with them yet but I’ve begun trading. Their website is bare bones and they don’t allow anything beyond basic options trades (no spreads, etc). Their fees are very low though, only $5 for stock trades (unlimited shares including penny stocks) and $0.75 per options contract ($6 minimum).
Anyway, back to the trading. I opened a long position of AMZN at $37.50 on Thursday and sold one $40 February call (ZQNBH). Online retailers had an excellent Christmas season with Amazon announcing that this season was their best ever. Despite the announcement there hasn’t been a lot of interest in AMZN. I believe that interest will increase as we approach their earnings release at the beginning of February. The implied volatility (IV) is quite a bit higher than historical volatility (HV), meaning that options are currently selling at a premium. If AMZN reaches $40 I earn about 10%. On the downside the stock has to decline about 3.4% before I start losing money thanks to the option. I plan on closing my positions by option expiration (2/14/07). As of now AMZN is up over $1 so everything is looking good.
