Moreover, we see that AMZN has continued to outperform both the tech and consumer discretionary sectors going into earnings, which is a strong indication of a potential beat.
However, we should remain cautiously optimistic as guidance for the rest of 2023 and into 2024 would likely be a primary driver of the stock's reaction after earnings. As the outlook for consumer spending looks more uncertain, that is the primary risk I see going into this earnings report. My view is that we should utilize options to take a bullish view going into this earnings report, thus mitigating those risks.
The implied volatility on AMZN at the moment is quite high, with IV Rank sitting at 50%, so my preference is to be a seller of options. I'm looking to sell the Dec 1 $124/$115 Put Vertical spread at a $3.17 credit.A vertical spread is selling options with the same expiration, but different strike prices. So this trade entails selling the $124 put option and the $115 put which both expire Dec. 1.
This strategy will risk $583 per contract if AMZN is below $115 on expiration with a maximum reward of $317 per contract if AMZN is above $124 at expiration.. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES.