Welcome to The Stock Market Millionaire Podcast, episode number 30. We’re gonna talk today about NASDAQ Stock Exchange, Best Stocks for Day Trading. Today’s pick, Amazon.
Amazon is traded on the NASDAQ stock exchange. Now why is NASDAQ stock exchange so heavily traded? It is very heavily weighted in technology. That’s the big component behind the NASDAQ. It is tech, right? And there are a lot of people chasing after that big technology, that new tech, that new invention creation, uh, that will dominate the world, the new iPad, the new, or, you know, I keep going back to “i” – the new Tesla, whoever. The new thing that’s going to dominate in the marketplace. Amazon is an amazing company. So let’s talk Amazon, right? Let’s go over what Amazon is.
First off. What does Amazon do? Well, understand their ticker symbol AMZN. Amazon sells books. They sell every other bit of stuff that you can buy and you can find. They own Whole Foods, and many other companies like that, all kinds of subsidiaries of, Amazon is, is now their own. It’s one of the largest market cap companies in the world. There’s flip flops all the time of it, but from a general standpoint, almost everybody knows who Amazon is and probably has bought something off of Amazon, at least one time. My mom shops on it, and she’s in her eighties! My mom shops on Amazon every week. I mean, we get stuff delivered from Whole Foods all the time. You order that on Amazon. It’s a great service. I love them as a company.
So I get asked “is Amazon one of the best stocks for day trading?” So the answer is yes – to me it is. That doesn’t mean for you it is. For me, it’s one of the better stocks for day trading because when we look at option chains, they are a more expensive stock. What I like about them is their options are not overly priced. They’re not ridiculous. They’re high, don’t get me wrong. You trade Amazon on a Monday as of this recording, you may pay $80 per share for an option contract on Amazon. So $8000 to buy one contract. So is that expensive? It could be, it could be considered expensive. You trade it on a Friday and you’re paying $30 or $35 a share, right? So $3000 or $3,500 to buy the contract. So is it one of the best day trading stocks? I think it is. Is it a good day trading stock towards the end of the week?
I think it’s phenomenal. I mean, very recently we saw Amazon make a hundred, I think it was $140 move in one day. If you could only capture $10, $20, $30 of that move, think of what that means to you. I have students that are traders that they only trade the big guns, the Amazons, the Bookings, the Chipotles, the Netflixes, whoever thought we’d call Netflix a big gun, right? It’s still under a thousand dollars, So it’s not technically in my book, the big guns, but it’s a more expensive stock, right?) Amazon is a great one to me as a day trader. I look to Amazon every single day. A handful of our students that are in our Inner Circle program, which is our highest level coaching program, they are proficient Amazon day traders. That’s what they do. They trade Amazon.
Is it better to trade the stock or Amazon call options for long term? And the answer is it really is going to come down to what you can afford. You know, I can buy this stock at three plus thousand dollars a share. So how many shares will you take? I don’t know. I’ll get like a pair. Give me two there’s $6,000, $7,000 for two shares. That doesn’t mean that the options are cheap. You will pay hundreds of dollars for an options contract when you’re looking long term. But the benefits of an option over a stock is when there’s a small movement in the stock price, there’s a magnified movement in the options price. I’m also more inclined to do more out of the money options on a longer term, Amazon than I am on other types of companies that don’t have those big moves.
Now, remember if there’s an advantage, there’s a disadvantage. Buying the stock, it never expires. My option is going to expire at some point. And you have a risk that you’re taking on when you buy that, that something could go wrong like that. But still for me, I like ’em best for short term. Could you long or, you know, investment type, uh, trades or again, investments, I guess on an Amazon? The answer is yes. I would just rather do it for, for short term. So for me, the answer is, it’s better to trade the call options than it is to trade the stock, short or long term.
Okay. So what is my, Rob’s best advice on how to trade Amazon? All right. If you are a newer trader, then you would wanna start off paper trading this. This is not for the faint of heart. You could have a two or $3 bid ask spread, which means you’re underwater $200 or $300 when you hit enter. So it’s something to consider as you’re getting started, of what goes on with it.But for me day trading using options, for me, Amazon options trading is critical and I’m gonna day trade options, that makes it the best for me. Options day, trade day, trade options. I don’t care. What way you wanna say it. I’m going to look to short term, in and out today, I’m not trading it any longer than that, which means I am trading this week’s expiration on Amazon. I don’t need to go out three weeks, three months, three years. I’m ready to trade it now, I’m out of it today. What do I care? Oh, but you’ve got time value deterioration. Heck I’m not worried about that. It’s a day trade. It’s a day trade. If I can find a clear and concise entry, get an explosive, move off the entry, pick enough up to make it worth my while, listen, if I can find a 10 or a $15, move on, Amazon, I’m all over it. That’s all I need. I don’t need a hundred dollars. I’d love to catch $140 move. I never would normally. I may catch it on one contract on my runner, but I’m going to hit multiple targets along the way. If I have a hundred dollars move on Amazon. So I’ll be out of most of my position before we ever get to that level. Is it okay to pick up one or two contracts like that? Yes, sure. I’m okay with getting the extra bang, but I don’t look for it. You may work overtime at your job, but heck I sure hope you don’t count on it because someday it just may not be there. No different here.
So here’s another one. Do you prefer to trade Amazon stock today or Amazon stock options? Okay. It kind of goes back to what I just said, but I don’t want it to be – the other, the previous question was more into the day trading realm; this is generally. I do swing trade Amazon. And if I do, I am not trading with the stock, I’m trading with the options. So I definitely think, you know, I’m building a case here that options are the way to go, and that day trading is the way to go. Because my last question I get, is does that make Amazon one of the best stocks for day trading? And in my opinion, it does now that’s me. I like trading the big guys. I like the heavy hitters. I look for those higher price stocks, the Googles of the world and so forth. But Amazon to me is very smooth as far as how it operates. There’s plenty of volume out there, there’s plenty of interest in the position, there’s a lot of open interest on the options, right? And there are three plus thousand dollars stock that has not yet come around with any hint of splitting that stock down. They don’t care about, you know, can the average person buy a hundred shares of Amazon – they’re not worried about that? They’re really not. Right. All they care about, Amazon, is how that position is going to function, and that’s how I am in the market. How does that position function for tradeability? In other words, is it a good trading vehicle or not? And to me, if I had to only pick one stock to trade every day, Amazon would be the one.
All right. So I hope that helps ladies and gentlemen with that make it a profitable day, stay focused on the quest to becoming a great trader, keep crushing it. And remember you’re just one trade away, take care, and I’ll see you all on our next update. Bye for now.