Amazon Stock Slips, but Traders Find a New Angle

After Amazon released its quarterly numbers, the stock fell sharply. Investors were shocked by a 10% drop after the earnings report, pushing the share price to around $197. Despite the decline, the company still posted a record fourth‑quarter revenue of $213. 4 billion, up 14% from last year. This performance puts Amazon on track to reach $1 trillion in annual revenue, making it the biggest earnings generator worldwide. During the earnings call, CEO Andy Jassy highlighted a critical point: Amazon’s growth could accelerate if it expanded its AI infrastructure. He suggested that more computing power would allow the firm to serve more customers and boost AWS revenue, especially as AI demand surges. This statement turns a stock that is currently “on sale” into an attractive long‑term opportunity for some investors.One strategy to capture upside while limiting downside is a risk reversal trade. The idea is to sell a put option at $205 for 3/20/2026, collecting $11. 50, and simultaneously buy a call at the same strike for $8. 50. The net credit of $3. 00 (or $300 per contract) is earned if the stock stays above $205 at expiration. If Amazon closes below that level, the trader would own the shares at about $202, but any gains beyond that point are unlimited. This approach is not without risk. An investor must be ready to hold Amazon stock if the price drops below $202 when the options expire. The trade’s payoff structure rewards a bullish view while providing a defined entry cost and potential upside that could be substantial.