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I bought AMZN puts

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This is my very first option buy. After I “buy to open” on this $65 put, I don’t know how to realize the gain, if any. So I called the broker and asked for help online, both came back with answer “sell to close”. That made me more re-assured. The option terminology can make one head spin (I am sure my wife is in that camp), here is some introductions on investopedia.

Of course, the big question for me is, I want to see a bad quarter from Amazon (am I a bad guy now?). The earning news is glass half full, and half empty (see this business week article). They beat the est. for current Q, issued positive guidance for year 2008; but the margin of Q4 2007 is squeezed. The stock traded around $65.50 after hour, which is roughly the strike price of my put.

Let’s see how it trades tomorrow.

(Update Jan 31) The analysts crashed my party (see this Barron’s blog). I think they may try to pop up the stock so that their firms can get out the positions now. Will wait for today’s GOOG earning, although I am not directly betting on it. But if GOOG crashes, other Internet stocks will go to kitchen sink…

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