To The Moon

We saw $Amazon.com(AMZN)$ getting a slight decline of 0.19% on Monday (29 Dec) after the Christmas holiday, and guess this show that Amazon fundamental is still strong enough to go through the volatility we are going to see coming from S&P 500 and NASDAQ dip.

AMZN implied volatility (IV) is 24.3, which is in the 9% percentile rank. This means that 9% of the time the IV was lower in the last year than the current level. The current IV (24.3) is -10.1% below its 20 day moving average (27.1) indicating implied volatility is trending lower.

In this article, I would like to share my plan for a Bull Put spread for Amazon. With Amazon expected move for 09 Jan at around $238 to $225, I have decided to do 230/225 bull put spread with expiration on 09 Jan 2026.

Strategy Definition: Bull Put Spread

A bull put spread (also called a put credit spread) involves:

• Selling the 230 put (short leg)

• Buying the 225 put (long leg)

Both options expire on January 9, 2026.

Goal: Profit if AMZN remains above the short strike (230) through expiration.

Risk Profile:

• Max profit: Net credit received (premium collected)

• Max loss: Difference between strikes ($5) minus credit received

• Breakeven: Short strike minus net credit

• Risk is defined and limited; you cannot lose more than the spread width less premium.

This structure is bullish to neutral (neutral-to-bullish) and profits from time decay and stable or rising stock price.

Market and Stock Context

Current Price Action

AMZN is trading in the low-to-mid $230s.

Fundamental and Sentiment Overview

• Analysts view Amazon as a top large-cap long for 2026, citing resilient demand, AWS growth, and expansion catalysts.

• Sentiment remains bullish overall, with technical levels near supports (e.g., ~$228–230) and implied probabilities favoring upside or stability.

• Consensus earnings and revenue forecasts project growth into 2026, particularly driven by AWS and services.

Implication: A bull put spread benefits if this neutral-to-bullish thesis holds through early 2026.

Risk/Reward Considerations

Precise premiums for these specific strikes and expiration require live option chain data, which I cannot access in real time. However, the structural math can be analyzed generically:

Max Profit

= Premium received. If AMZN closes above 230 at expiration, both puts expire worthless and you keep the full credit.

Max Loss

= $5 (difference between strikes) − Credit received. This would occur if AMZN closes below 225 at expiration.

Breakeven

= 230 − Credit received.

As a credit strategy, the closer the underlying remains above the short strike (230), the more likely the trade ends profitably.

Probability Considerations

• Out-of-the-money bull put spreads typically have a higher probability of profit when the underlying stays above the short strike. Current positioning near technical support adds to this probability.

• A key risk is a breakdown below near-term structural supports (~$228–$225), at which point the spread may go in the money and incur losses.

Volatility and Time Decay

Implied Volatility (IV)

Bull put spreads benefit from falling or stable implied volatility because selling volatility helps premium decay.

• AMZN’s implied volatility fluctuates with macro trends and earnings expectations.

• If IV contracts post-earnings or into 2026, time decay accelerates profit capture for credit spreads.

Theta (time decay) is your friend in a credit spread. A January expiration gives ~5+ weeks of time decay acceleration in the final month.

Key Levels To Watch

Support Levels:

• Near-term technical support around ~$228–$230 zones. A break below these would threaten the spread’s profit potential.

Upside Pressure:

• If AMZN advances toward $235–$240, the spread remains safely out of the money.

Catalysts:

• Earnings announcements, macro shifts (rates, liquidity), and AWS growth cycles are relevant.

Scenario Analysis

Bullish/Neutral Outcome (Bull Put Spread Wins)

• AMZN remains above ~230 through January 9, 2026.

• Puts decay; credit is maximized.

• Ideal if price consolidates or makes modest upside progress.

Breakeven point will be ~225–230 minus premium received, implying a cushion below current price.

Moderately Bearish Outcome

• AMZN dips but stays above the breakeven line.

• Spread may still expire worthless or be managed profitably (closing early).

Bearish Outcome (Loss)

• AMZN falls significantly below 225.

• Spread incurs max loss = $5 minus premium credit.

• Consider risk management (stop-loss, rolling) before expiration if price weakens markedly.

Risk Management and Adjustments

Entry Considerations

• Evaluate credit received vs. max risk before entering. A reasonable ratio (e.g., >20% credit of risk) is often preferred for bull put spreads.

Early Exit / Adjustment

If AMZN shows technical breakdown below critical support (e.g., below 225), consider:

• Buying back the spread to limit losses

• Rolling down/out to lower strikes and later expiration (if bullish thesis still intact)

Portfolio Fit

• Use position sizing to avoid outsized exposure — defined-risk makes it suitable for allocation within a disciplined options portfolio.

Summary

Bull Put Spread 225/230 (09 Jan 26) — Trade Thesis

Bullish to Neutral View:

• Strategy profits if AMZN holds above ~$230 through early 2026.

• Higher probability of profit if technical support holds and fundamental catalysts drive or maintain price.

• Time decay and potential volatility contraction support the short put exposure.

Risks:

• Downside below the long strike (~225) triggers max loss.

• Significant negative catalysts or macro weakness near expiration increase risk.

This spread is appropriate for a defined-risk bullish/neutral view on AMZN into January 2026. Ensure premium vs. risk is compelling and consider technical stop guidelines to protect capital if the stock approaches support break levels.

Appreciate if you could share your thoughts in the comment section whether you think a short-term bull put spread might be appropriate for Amazon now.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.