Mike Khouw looked at Amazon's chart and decided the most profitable trade was betting it doesn't move. That's where we are now. Professional traders selling options strategies with reptile names because a trillion-dollar company might go sideways for seven weeks.
The jade lizard. Not a short strangle. Not an iron condor. A jade f*cking lizard. Someone in a Chicago trading pit thirty years ago named this thing after a reptile that also does nothing all day and now retail traders have to google "what is jade lizard options" at 11 PM on a Tuesday.
Amazon shares are stuck in a rut, according to the headline. A rut. The company that delivers toothpaste to your door in four hours and runs half the internet is trading like a regional bank in Omaha. Jeff Bezos is worth $180 billion and his stock moves like a utility.
Khouw's thesis: things will stay that way. He looked at seven weeks of potential price action and thought, "You know what? Nothing's gonna happen." Then he structured a three-legged options position to profit from that nothing. That's the trade. Professional nihilism with a bid-ask spread.
The jade lizard works if Amazon stays range-bound. It prints money if the stock just sits there like a divorced dad at a Buffalo Wild Wings. You sell a put. You sell a call spread. You collect premium. You pray Andy Jassy doesn't say anything interesting on the earnings call.
Retail traders will see this headline and think they discovered a secret. They'll open their Robinhood accounts and try to build a jade lizard with $340 in buying power. They'll leg into it wrong. They'll get assigned on the short put. They'll post loss porn with the caption "what happened?"
Mike Khouw happened. He bet your favorite stock would bore you to death, and he's probably right.
Photo by Marques Thomas on Unsplash
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