$AMZN daily pick: sell Dec 18 $220 put (buy-side) after the Q3 miss
$AMZN: I'm selling the Dec 18 $220 put on @amazon after the earnings miss and getting paid to wait.
As of Friday's close ($240.35, markets closed for the weekend):
Opened down 4.6% and closed down just 1.4%
Credit $3.80 for about 1.7% in 47 days (~13% annualized)
Breakeven $216.20, 10% below Friday
About 22x 2027 EPS estimates
I think the AI spending scare is overdone here because AWS grew 39% to $46B and management guided over 40% AWS growth in both 2027 and 2028.
Worst case I own Amazon 10% cheaper while everyone else argues about capex.
Not financial advice
Why a put and not shares? Free cash flow was a $42.4B outflow over the last 12 months after $77.3B of capex in Q3 alone and Jassy said 2027 spending will be meaningfully more. That can keep a lid on the stock for a while. I'd rather collect $380 and let it come to me under $220.
Don't have $22,000 sitting in cash? Defined-risk version: sell the $220 put and buy the Dec 18 $200 put for about $2.52 credit. Max risk $1,748 and breakeven $217.48. You lose the full $1,748 if it's under $200 on Dec 18.
Bear case: revenue and EPS both missed, ad revenue of $19.6B came in under estimates and the Q4 sales guide midpoint was below the Street. The 52-week low is $196 from February. If the AI trade keeps cracking that's in play and it's below my strike. That's why the strike is 8.5% below Friday and not at the money.
What I'd watch: AWS backlog is $578B and operating margin hit a record 13.9%. The next report is expected around Feb 4 so this put expires before the print. Street target is about $328 with 84 Buys, 10 Holds and 1 Sell for what it's worth.
Sources: Amazon Q3 2026 release: AWS +39% to $46.0B, record 13.9% op margin, TTM FCF -$42.4B, 40%+ AWS growth 2027/2028 · CNBC: EPS $1.89 vs $1.96, revenue miss, capex $77.3B, ads $19.64B vs $20.82B est · CNBC: analyst targets after Q3 (MS $335, GS $370, BofA $317) · Motley Fool: AMZN closed $240.35 (-1.41%) Oct 30 after opening ~5% lower · Business Insider: Amazon fell as much as 7% before paring losses · The Next Web: $578B AWS backlog, 2027 capex meaningfully more
Not financial advice. For informational and educational purposes only.
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