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103% Profit On An Amazon Weekly Call Option!

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Amazon.com, Inc. (NASDAQ: AMZN) has been a stellar performer in the long-term, with its shares soaring around 45% over the last 12 months.

AWS's strategy of providing multiple large language models (LLMs) and AI tools to its customers is a smart move. Amazon also has numerous opportunities to use AI internally to further reduce costs and boost profitability.

Amazon.com, Inc. continues to grow, with multiple growth drivers including advertising, expansion into healthcare, and its forthcoming Kuiper satellite internet service. The company is focused on increasing profitability, as evidenced by its earnings jumping 225% year over year in the first quarter.

This set the scene for Weekly Options USA Members to profit by 103% using an AMZN Weekly Options trade!

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Saturday, June 08, 2024

by Ian Harvey

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UPDATE

Amazon.com, Inc. (NASDAQ: AMZN) has made an impressive recovery which has proven the reliability of the company's business model and its worth as a long-term investment.

Amazon reported its first-quarter 2024 earnings on April 30, with revenue for the quarter increasing by 13% year over year, beating analysts' forecasts by $750 million. However, the most impressive growth came in the form of operating income, which soared 221% to more than $15 billion.

The retail company's profits skyrocketed over the last year thanks to positive growth in its retail segments and cost-cutting measures.

Amazon's e-commerce segments are rapidly expanding and show no signs of slowing. Amazon Web Services (AWS) holds a leading market share in cloud computing, an industry with massive growth potential amid a boom in AI.

In Q1 2024, AWS was responsible for 62% of Amazon's operating income despite earning the smallest portion of revenue between its three segments. The cloud service gives the company a powerful role in tech and AI and will likely continue to boost earnings for years.

Amazon's North America and international segments continued to produce nice sales growth. In Q1, the North America segment had a 12% top-line increase while international's growth was 11% (both figures excluding the impact of foreign currency exchange fluctuations).

Profitability improved significantly, which management credited to higher unit sales and advertising revenue. The North America segment's operating income was $5 billion versus $898 million in the prior-year period, and international flipped to a $903 million profit from a $1.2 billion loss.

Advertising services remain a strong growth driver. Revenue from that source has been growing at better than 20% for several straight quarters, including 24% in the latest period.

The AMZN Weekly Options Potential Profit Explained.....

** OPTION TRADE: Buy AMZN JUL 12 2024 180.000 CALLS - price at last close was $4.35 - adjust accordingly.

Obviously the results will vary from trader to trader depending on entry cost and exit price that was undertaken.

Entered the AMZN Weekly Options (CALL) Trade on Monday, June 03, 2024 for $4.65.

Sold the AMZN Weekly options contracts on Friday, June 07, 2024 for $9.45; a potential profit of103%.

(This result will vary for members depending on their entry and exit strategies).

Don’t miss out on further trades – become a member today!

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Why the AMZN Weekly Options Trade was Originally Executed!

Trade Analysis

Amazon.com, Inc. (NASDAQ: AMZN) has been a stellar performer in the long-term, with its shares soaring around 45% over the last 12 months. As the fifth-largest company on the S&P 500 index, Amazon has reaped significant benefits from its AI initiatives. The company's cloud services provider, Amazon Web Services (AWS), is expected to be one of the biggest beneficiaries of the generative AI explosion. AWS's strategy of providing multiple large language models (LLMs) and AI tools to its customers is a smart move. Amazon also has numerous opportunities to use AI internally to further reduce costs and boost profitability.

Current Situation

Amazon.com, Inc. continues to grow, with multiple growth drivers including advertising, expansion into healthcare, and its forthcoming Kuiper satellite internet service. The company is focused on increasing profitability, as evidenced by its earnings jumping 225% year over year in the first quarter. Amazon is investing in technologies, including automation and robotics, to further reduce costs.

Catalysts for the Trade

Amazon.com, Inc. is expected to continue benefiting from the increasing trend of consumers spending more online relative to their overall retail spending. In the first quarter of 2024, e-commerce sales accounted for 15.9% of all U.S. retail sales. Amazon, being the world's largest e-commerce company, is expected to be the biggest beneficiary of this trend. In 2023, Amazon had a nearly 38% share of the U.S. retail e-commerce market.

Amazon Web Services (AWS), the world's largest cloud computing service, has significantly benefited from the industry's strong growth. AWS still has much growth potential due to the industry's robust long-term growth projections, largely driven by the surging interest among entities to obtain generative artificial intelligence (AI) capabilities.

Amazon continues to add members in the U.S. and internationally to its Prime subscription loyalty program. Prime membership grew to a record high of 180 million U.S. consumers in March. Amazon continuously adds free benefits to Prime to keep current members happy and to entice others to subscribe. Amazon benefits from growth in its Prime program in two ways: it generates more subscription revenue and Prime members have been found to spend more money than nonmembers on Amazon's e-commerce site.

Amazon has countless other businesses with growth potential: digital advertising, healthcare, Prime Video, and smart-home gadgets, to name a few. The company's advertising business is particularly noteworthy because it's been growing rapidly and is presumably quite profitable. In the first quarter of 2024, Amazon's advertising revenue jumped 24% year over year to $11.8 billion.

Amazon.com's stock is reasonably valued. Wall Street analysts expect Amazon's earnings per share (EPS) to grow at an average annual rate of 28.2% over the next five years. The company's shares are currently priced at 37.9 times its projected forward earnings. While this isn't a cheap valuation, it's reasonable for a stable company like Amazon that generates strong cash flows from operations.

Further Catalysts for the Trade

Amazon.com has liabilities of US$153.0b due within a year, and liabilities of US$161.3b falling due after that. On the other hand, it had cash of US$85.1b and US$41.7b worth of receivables due within a year. Given Amazon.com has a humongous market capitalization of US$1.84t, it's hard to believe these liabilities pose much threat. Amazon.com grew its EBIT by 232% last year, which is an impressive improvement. That boost will make it even easier to pay down debt going forward.

Several heavyweight analysts have reiterated their Buy ratings on Amazon stock while raising their price targets. Much of this was driven by the company’s solid Q1 earnings report at the end of April, which showed how AI is turning into a new multi-billion recurring revenue business for the company. The report also confirmed for many that one of Amazon’s biggest headwinds from recent years, a broad slowdown in corporate cloud spending, has all but dissipated.

Analysts.....

This theory has been backed up by several heavyweight analysts, who, in recent weeks, have clamored to reiterate their Buy ratings on Amazon stock while raising their price targets. Much of this was driven by the company’s solid Q1 earnings report at the end of April, which showed how AI is turning into a new multi-billion recurring revenue business for the company. The report also confirmed for many that one of Amazon’s biggest headwinds from recent years, a broad slowdown in corporate cloud spending, has all but dissipated.

In the aftermath of the report, Morgan Stanley, Wedbush, UBS Group, Citigroup, Barclays, and many of their peers screamed in unison, “Buy.” Refreshed price targets ranged from $220 to $240, but interestingly, Amazon shares topped out at around $190 in their post-earnings rally. They’re currently trading around the $180 mark, adding to the theory that those of us thinking about buying are looking at a solid bargain. 

It’s worth noting that just yesterday, the team at Tigress Financial reiterated their Buy rating and boosted their price target up to a street-high of $245. That’s pointing to a targeted upside of at least 35% from where shares closed on Thursday. Not bad for a $1.9 trillion business. 

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Company Overview

Amazon.com, Inc., the world's largest and leading portal for eCommerce, was founded by Jeff Bezos in 1994 and went public in 1997. The company is headquartered in Seattle, Washington, and is a member of the influential FAANG group of stocks. Amazon operates in three segments including North America, International, and Amazon Web Services. The company provides services for merchants including listing, fulfillment, and advertising as well as subscriptions. Services provided by Amazon Web Services include cloud computing, storage, database maintenance, analytics, machine learning, and even artificial intelligence.

Technical Analysis

  • Market capitalization: $1.84 trillion.
  • PE ratio: 49.42.
  • Beta: 1.15.
  • 52-week low: $118.35.
  • 52-week high: $191.70.
  • Fifty-day simple moving average: $182.34.
  • Two-hundred-day simple moving average: $167.52.

Summary

Amazon.com, Inc. is poised for growth with multiple growth drivers and a reasonable stock valuation. The company's shares have soared around 45% over the last 12 months, and it is expected to continue benefiting from the increasing trend of consumers spending more online. Amazon Web Services (AWS), the world's largest cloud computing service, has significantly benefited from the industry's strong growth and still has much growth potential. Amazon continues to add members to its Prime subscription loyalty program, and the company's advertising business is growing rapidly.

Trade Execution

Place a buy order for AMZN JUL 12 2024 180.000 CALLS with a strike price of $180.00 and an expiration date of July 12, 2024, at a premium of $4.35. Adjust your sell point and stop loss according to your risk tolerance.

Disclaimer

This trade suggestion is based on the current market analysis and is not a guaranteed success. Always consider your risk tolerance and consult with a financial advisor if necessary.

Amazon Chart

Therefore…..

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