Options: HHHHH
Options: HHHHH
Options: HHHHH
Comparison ladder
Covered Call Diagonal Spread Based on range of Covered Call Risk Assessment
stock prices at expiration Our 4 Key (Low Relative Risk) covered call strategy risk assessment reflects the
volatility of AMZN and S&P Capital IQs view of the company's prospects over
Call Month Jan '17 Above $714.28 the coming 12 months. A 4 Key ranked strategy has low relative risk, which
Buy-Side
for over $660.98 at expiration, holding the stock without selling the call would
Sold Call Strike Price $615.00 have yielded a higher return. See elsewhere in this report for a further
$42.95 Between $597.44 - $574.79
Current Sold Call Bid Price discussion of potential risks related to the Covered Call Strategy.
Covered Call
relative risk. If the stock price at expiration is below $615 this strategy will not
Assigned Return ($) 40.21 27.70 generate the potential returns shown. Another risk for this strategy is related to
Assigned Return (%) 7.00 10.77 the bought Call Option price. If the stock drops in price between now and
Between $574.79 - $714.28
Ann. Assigned Return (%) 38.69 59.54 expiration date, there is a possibility that the Jan '17 330.00 call could drop
Diagonal Spread (Max. Return)
Expiration Date March 18, 2016 March 18, 2016 quickly. See elsewhere in this report for a further discussion of potential risks
Trade Duration (Days) 66 66 Assumes Long Call related to this strategy.
Retains Time Value
Relative Risk Ranking 4 3
Option Strategies Potential Profit/Loss Comparison Chart. (See disclosures for charts on last page)
16 0 20
120
10
Potential Profit/Loss (Dollars)
80
Potential Profit/Loss (%)
0
40
0 -10
-40
-20
-8 0
-3 0
-120
Amazon.com, Inc. (NASDAQ: AMZN) closed yesterday at $617.74. So far the stock has hit a 52-week low of $285.25 and 52-week high of $696.44. AMZN has had an S&P Capital IQ 4 STARS (out of 5) ranking
since 7/24/2015. On 10/22/2015 S&P Capital IQ equity analysts set a 12-Month price target of $685.00 for the stock. Amazon.com, Inc. stock has been showing support around $590.77 and resistance in the
$633.33 range. For a hedged play on this stock, consider a Mar '16 covered call with a 615 sold call for a net debit in the $574.79 area. The strategy has a 66 day duration, provides 6.95% downside protection
and a 7.00% assigned return rate for a 38.69% annualized return rate (for comparison purposes only). This strategy has a 4 Key (out of 5) Low Relative Risk ranking. Another way to play this stock would be with a
diagonal spread that substitutes a longer term call option in place of the covered call stock purchase. To use this strategy consider going long the AMZN Jan '17 330 Call and selling the Mar '16 615 call for a
$257.30 debit. The strategy has a 66 day life and would provide 4.93% downside protection and a 10.77% assigned return rate for a 59.54% annualized return rate (for comparison purposes only). This strategy
has a 3 Key (out of 5) Moderate Relative Risk ranking. Amazon.com, Inc. does not pay dividends at this time.
Please read the disclosures on the last page of this report. This report is provided by Standard & Poor's Capital IQ and contains content provided by Fresh Brewed Media/O2 Media LLC.
Options Report
January 12, 2016
Please read the disclosures on the last page of this report. This report is provided by Standard & Poor's Capital IQ and contains content provided by Fresh Brewed Media/O2 Media LLC.
Options Report
January 12, 2016
Glossary (Continued from Page 2) fees or other economic benefits from those organizations, Standard & Poors, its affiliates, and any third-party providers,
including organizations whose securities or services they as well as their directors, officers, shareholders, employees
may recommend, rate, include in model portfolios, evaluate or or agents (collectively S&P Parties), do not guarantee the
Strategy otherwise address. accuracy, completeness or adequacy of this material, and
The strategy refers to the choice of options methods S&P Parties shall have no liability for any errors, omissions,
deployed to seek to profit on a stock and may be selling a Standard & Poors keeps certain activities of its business units or interruptions therein, regardless of the cause, or for the
covered call, selling a diagonal spread or holding the stock. separate from each other in order to preserve the results obtained from the use of the information provided by
Time Value independence and objectivity of their respective activities. As the S&P Parties. S&P PARTIES DISCLAIM ANY AND ALL
Option premium is made up of either time value, intrinsic a result, certain business units of Standard & Poors may have EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT
value or both. From its creation date to its expiration date, an information that is not available to other Standard & Poors LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY,
option's time value decays away and any value left is intrinsic business units. Standard & Poors has established policies and SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
value which rises or falls with the price of the stock. If XZY procedures to maintain the confidentiality of certain USE. In no event shall S&P Parties be liable to any party for
stock is at $51.00 and the April 50 call is trading at 2.50, the non-public information received in connection with each any direct, indirect, incidental, exemplary, compensatory,
option has 1.00 (51.00-50.00) of intrinsic value and 1.50 analytical process. punitive, special or consequential damages, costs, expenses,
(2.50-1.00) of time value. No other unit of S&P, including S&P Capital IQ Equity Research, legal fees, or losses (including, without limitation, lost
contributed to the content of this report. income or lost profits and opportunity costs) in connection
Trade Duration (Days) S&P does not trade for its own account. with any use of the information contained in this document
This is the number of days a trade is active. It is the total This report is created by InvestorsObserver ("IO"), a subsidiary even if advised of the possibility of such damages.
number of days from the initial opening transaction until of Fresh Brewed Media/O2 Media LLC. (FBM). Standard &
expiration day. Poors Capital IQ (S&P) provides this report to subscribers Certain information presented herein is derived
who provide this report to you. FBM and IO have developed from the S&P Capital IQ Stock Report for the underlying stock;
Volatility and are responsible for the strategies, discussions, however, not all information from the Stock Report is
This is a rating of the stocks price volatility over the past year. assessments and other analyses of the options presented in presented herein.
Volatility is the propensity of a security to swing up and down this report. For key statistics, assessments and other information
in price. pertaining to the underlying stock, you should consult the
applicable S&P Capital IQ Stock Report. Investors are
Disclosures Information Pertaining to the Options Report responsible for conducting their own independent research
and/or seeking professional advice before making any
OPTIONS STRATEGIES: KEY RANKINGS : All options investment decision.
This report is for informational purposes only. When using this Past stock, index, or option performance is no guarantee of
report, investors are advised to consult the accompanying strategies are based upon underlying stocks that have been
assigned a 3, 4, or 5-STARS ranking by S&Ps Capital IQ equity future performance or price appreciation or depreciation.
glossary of investment terms. This material is not intended as an offer or solicitation for the
analysts. Each hedged strategy shown is given a "Key" ranking
as an indicator of relative risk for the strategy. 1 Key is highest purchase or sale of any security or other financial
The data and information shown in this report is intended instrument. A reference to a particular investment or
for use by financial professionals and/or sophisticated relative risk, while 5 Keys denotes lowest relative risk. The Key
rankings are determined based on numerous factors ranging security is not a recommendation to buy, hold or sell such
investors who should verify that all data, assumptions, and investment or security, nor is it considered to be investment
results are accurate before making any investment decision from the S&P Capital IQ STARS ranking for the underlying
stock to the volatility of the associated equity options. The Key advice. This material does not take into account your
or recommendation. Before acting on any information in this particular investment objectives, financial situations or
document, an investor should consider whether the strategy is Ranking for each strategy is determined at the time the
strategy is initially identified based on market prices, STARS needs, trade size, brokerage commissions and taxes and is
suitable for their particular circumstances and, if necessary, not intended as a recommendation of particular securities,
seek professional advice. rankings and statistics before the market opening of the date
on this report. Strategies are ranked using a 1 to 5 ranking financial instruments or strategies to you. Securities,
Standard & Poor's Capital IQ ("S&P") STARS system as follows: financial instruments or strategies mentioned herein may
RANKINGS (ON UNDERLYING STOCK): not be suitable for all investors. S&P Parties are not
1 Key -Highest Relative Risk responsible for suitability. Any opinions expressed herein
STARS rankings are subject to change at any time. The STARS are given in good faith, are subject to change without notice,
Ranking system is defined as follows: 2 Key -Considerable Relative Risk and are only current as of the stated date of their issue.
Prices, values, or income from any securities or investments
HHHHH 5-STARS (Strong Buy): Total return is expected to 3 Key -Moderate Relative Risk mentioned in this report may fall against the interests of the
outperform the total return of a relevant benchmark, by a wide investor and the investor may get back less than the amount
4 Key -Low Relative Risk invested. Where an investment is described as being likely to
margin over the coming 12 months, with shares rising in price
on an absolute basis. yield income, please note that the amount of income that the
5 Key -Lowest Relative Risk investor will receive from such an investment may fluctuate.
HHHHH 4-STARS (Buy): Total return is expected to Where an investment or security is denominated in a
COMPARISON LADDER: The Comparison Ladder is different currency to the investors currency of reference,
outperform the total return of a relevant benchmark over the
designed as a tool to help evaluate which, if either, of the changes in rates of exchange may have an adverse effect on
coming 12 months, with shares rising in price on an absolute
strategies (Covered Call or Diagonal Spread) is more the value, price or income of or from that investment to the
basis.
attractive based on an assumed range of stock prices at investor. The information contained in this report does not
expiration. constitute advice on the tax consequences of making any
HHHHH 3-STARS (Hold): Total return is expected to closely
approximate the total return of a relevant benchmark over the particular investment decision. This material is not intended
INFORMATION ON CHARTS: Return data is based on one for any specific investor and does not take into account your
coming 12 months, with shares generally rising in price on an options contract and/or owning 100 shares of the underlying
absolute basis. particular investment objectives, financial situations or
stock. Return data excludes transaction costs, taxes and the needs and is not intended as a recommendation of particular
effect of margin calls. The Potential Profit/Loss chart is based securities, financial instruments or strategies to you. Before
HHHHH 2-STARS (Sell): Total return is expected to on assumed price movements of the underlying stock and
underperform the total return of a relevant benchmark over acting on any recommendation in this material, you should
does not reflect all possible prices. Therefore, the potential consider whether it is suitable for your particular
the coming 12 months, and the share price not anticipated to loss is not necessarily limited to the loss depicted in the chart.
show a gain. circumstances and, if necessary, seek professional advice.
This document does not constitute an offer of services in
HHHHH 1-STARS (Strong Sell): Total return is expected to jurisdictions where Standard & Poors or its affiliates do not
underperform the total return of a relevant benchmark by a Disclaimers and Warnings: have the necessary licenses.
wide margin over the coming 12 months, with shares falling in
This investment analysis was prepared using the following
price on an absolute basis. RISKS OF USING EXCHANGE-TRADED OPTIONS : sources: Standard & Poors, 55 Water St., New York, N.Y.
Investing in options carries substantial risk. An investor may 10041, Fresh Brewed Media/O2 Media LLC, 413-A E. Main
A reference to a particular investment or security by Standard
lose the entire amount of the premium paid for an option. Street, Charlottesville, VA. 22902
& Poor's and one of its affiliates is not a recommendation to
Option strategies do not protect against a continued decline Reports prepared using technology protetected by US Patent
buy, sell, or hold such investment or security, nor is it
in the value of the underlying stock, and it is possible to lose Numbers 7,856,390 and 7,716,116
considered to be investment advice. Standard & Poor's and its
the entire amount of money invested in the underlying stock.
affiliates provide a wide range of services to, or relating to,
Prior to buying or selling options, a person should consult a
many organizations, including issuers of securities,
financial advisor and must receive a copy of Characteristics
investment advisers, broker-dealers, investment banks, other
and Risks of Standardized Options which is available at
financial institutions and financial intermediaries, and
http://www.cboe.com/resources/intro.aspx
accordingly may receive
Redistribution or reproduction is prohibited without written permission. Copyright 2014 by Standard & Poor's Financial Services LLC. All rights reserved. This report is provided by Standard & Poor's Capital IQ and contains
content provided by Fresh Brewed Media/O2 Media LLC. STANDARD & POOR'S, S&P, S&P CAPITAL IQ, S&P 500, S&P EUROPE 350 and STARS are registered trademarks of Standard & Poor's Financial Services LLC.
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