UPDATEDMarch29th2011@7:00am:

IaminRiodeJaneiro,Brazilthisweek,andwell,yourenot。

ButIwouldbealittlecarefultakingtheothersideofmytradesthisweek,becauseIliterallyhavethisguylookingovermyshoulder。

Thatsaid,allthisBrazilstuffgotmethinkingabouttheAmazonandthenofcoursemybearishviewonAmazon。

com?

BackonFeb24thIrecommendedexpressingnear-termbearishviewsinAMZNthroughthepurchaseofAprilPutSpreadsratherthanshortingthestock。

ThetradethatIsuggestedandputonwastheApr170/150PutSpreadwhichcostabout4。

25whenthestockwasrightaround177?

Iamrollingthistrade,whichontodaysclosecouldbesoldforaboutthesamepricethatIpurchaseditforbackinlateFebruary。

-Atonepointwhenthestocktradeddowncloseto160midlastweek?

andthespreadwasworthcloseto7。

50Itooksomeprofits?

OnOptionsActionacoupleweeksbackwhenaskedaboutthistradeIsuggestedthatIwouldlikelytakesomeprofitsatsomepointifIdidntthinkthestockwasgoingtobreakbelow160(itdidnt)andthenuseamentalstopofapproximatelywherethespreadwastradingrelativetowhereIboughtit,whichIalsodid?

Withthestocknowbackaround170,IwantedtofindastructureinMaythatwouldbenefitfromwhatIexpecttobeguidanceforQ2thatcouldcausesomevolatilityinthestock?

Earningsdatenotconfirmedyet,butBloombergestimatesApr25th(companyusuallyannouncesbetween22ndand28th)。

NEWTRADE:Iputthistradeonyesterdayfor3。

20whenstockwastradingaround170。

25(similartowhereitistradingafterhoursonthenewsthatEBAYwillacquireGSIC)?

Soifstockopensabove170thespreadshouldbeofferedatsimilarlevels。

(spreadhasabouta20deltasoforevery$1moveinthestockthespreadshouldmoveabout。

20,butthedeltaofthespreadwillincreaseordecreaseasthestockmovesfurtherin/outofthemoneyandcloseto/orawayfromthestrikesthatyouarelongandshort)

BuytheMAY165/150PutSpreadfor~3。

20

-BuyMay165Putfor6。

60and

-SellMay155Putat3。

40

Break-EvensonMayExpiration:

Upside:btwn161。

80and165youcanloseupto3。

20youpaidforthespread,above165youloseall3。

20orlessthan2%oftheunderlyingstockprice。

Downside:btwn161。

80and155youcanmakeupto6。

80,below155(down~9%fromcurrentlevels)youmake6。

80oralmost2/3ofthewidthofthespread。

TRADERATIONALE:Gonnabeshortandsweethere:1。

seebelow-allstillstands,2。

BBYearningsandguidanceIamwillingtobetthatthisisnotjustAMZNeatingtheirlunch,andlastly,4。

NEWANDEXISTINGHOMESALESWEREHORRIBLE(sorrytoshoutbuttheywerethatbadforthisstageofthesupposedrecovery)。

-StocktradedverypoorlybeforethemarketcorrectionofmidMarchbutseemedtohavebottomedandstopmakingnewlowsattheheightoftheselloff。

Chartbelowisa5day,showsthebounceoffaveryimportant160supportlevel?

Ithinkthereisanopportunityaswegetclosertoearningsandthemarketrallystallstoseethisstockfinallybreakthat160level?

Thecatalystpossiblybeingearningsnextmonth。

5DayAMZNchartChartbyLiveVol

-Thisisagreatcompany,andIamoneoftheirbiggestcustomers,butIamveryconflictedasaconsumerandatraderwhenIthinkaboutthecompanytheyarealmosttoogoodtotheircustomerswithPrimeshipping,massiveselectionandreallycheappricesthecontrarianinmesaysthatatsomepointsoontheinvestmentcommunitywillwakeupandstartthinkingaboutthemalittlemorelikeWMTandTGT?

Incidentally,thoseretailersaretryingtohelpthatthoughtprocessbychangingthetaxcodetomakeAmazonmorelikethem。

ButuntilthenIwillcontinuetodefinemyriskintheoptionsmarketwhilemakingbearishbetsonthestock。

FROMFeb24th,2011:

AMZN(~177)-PSA(PublicServiceAnnouncement):ShortingAMZNIsHazardousToYourFinancialHealth。

ConsiderBuyingAprPutSpreadsToExpressShortTermBearishView

Letmereiterate。

notagreatideatoshortAMZN,WallStreetislitteredwithguys(andgals)whothoughttheybaggedthisone。

butveryfeweverhaveandmostfoundittobeacareerendingendeavor

MYVIEW:WhenAMZNreportedinlateJanthat4Q10salesfellshortofexpectationsandthatoperatingincomeguidancefor1Q11wouldbewellbelowstreetconsensuscausingsharestoselloff~7。

5%thenextday?

Iwouldnothavethoughtthestockwouldhaverecoveredinamatterofweeksandalmostmadea52weekhigh。

butthatsexactlywhatitdid。

Sincethatridiculousrallythestockhasretracedhalfofthatmoveinsympathywiththemarketsselloff,butthereisstillmoretogoifyouarepayingattentiontosomeoftheresultsandcommentaryfromtheirlamebricksandmortarcompetitors。

-InaweekthatsawdisappointingfundamentalnewsfromretailerssuchasWMT,RSHandSHLD,allofwhichfellshortofinvestorsexpectationsofeitherlowerearningsand/orsalesiamhardpressedtothinkthatAMZNwontandhasntfeltsomeofthesamepressuresinaperiodwheretheyhavealreadyacknowledgedthattheywillspendaggressivelytobuildfulfillmentanddatacenters。

TRADE?

BUYAPRIL170/150PutSpreadsfor~4。

25

-Buy1Apr170putfor5。

75and

-Sell1Apr150putat1。

50

Break-EvensonAprilExpiration:

Upside:170oraboveyoulosethe4。

25premiumthatyoupaid(~2%oftheunderlying)btwn170and165。

75canloseupto4。

25(longstrikelesspremiumpaid)。

Downside:btwn165。

75(-6%)and150(-15%)canmakeupto15。

75

BestCase:Below150umake15。

75(orabouta9%return)

RATIONALE:Innameslikethis,haveaviewanddefineyourrisk,specificallydefinewhatyouarewillingtoloseifthestockgoesup,whichinthiscaseitusuallyitdoes。