Amgen: Exploring Iron Condors and Butterfly Spreads

The podcast explores two options trading strategies for Amgen stock: the iron condor and the butterfly spread. The iron condor offers a potential profit with limited risk, aiming to capture a potential price decline or sideways movement in the stock price. The butterfly spread, also known as a 'mullet' trade, is a more complex strategy that can deliver higher potential returns, but also entails greater risk if the stock price moves sharply in a specific direction.

Iron Condor Trade

• 00:01:31 The iron condor strategy for Amgen stock involves setting up short call and put options at specific strike prices. The goal is to profit from a sideways market movement within a limited price range. The strategy seeks to maximize profits with limited risk, making it suitable for traders with a neutral outlook on the stock's price action.

Butterfly Spread Trade

• 00:02:55 A butterfly spread, also called a 'mullet' trade, is a more complex strategy that can capture a potential upside move. The trade involves buying and selling a combination of calls and puts at different strike prices. It aims to benefit from a specific price action within a range, while capping maximum losses and providing a higher upside potential compared to the iron condor.

Amgen Stock Price Analysis

• 00:00:00 The weekly chart of Amgen stock suggests a potential do-or-die zone around 260. The recent linear regression channel shows potential support around 260. The presenter identifies 350 as a key resistance level, which could lead to further price corrections.

Options Pricing and Margin

• 00:03:56 The options for January's Amgen contracts are deemed expensive, leading the presenter to consider a 1x3x2 butterfly trade. The presenter also discusses the potential for margin trading, noting that it requires awareness of the risks involved. The speaker prefers trades that don't necessarily require margin unless traders have a certain comfort level with it.