Along with many technology companies, Amazon has seen a significant correction since the mid-September top. There may be some potential levels of support coming up from a rising channel trendline as well as the inclining 200-day moving average.

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GET READY
AMZN reports earnings Thursday after the close. Earnings events have been fairly volatile in the past, but with clear support and resistance coming in from the past quarter’s trading range, it may be profitable to put on an iron condor before earnings.

OPTIONS PLAY
The iron condor is an options spread that is limited risk, limited reward, and profits if the underlying stock stays between the short strikes between now and options expiration.

HERE’S THE TRADE
A good trade to take going into earnings would be the November 200/205 265/270 iron condor. This is where you buy the 200 put, sell the 205 put; sell the 265 call and buy the 270 call.

The options market is pricing in just under a 9% move post earnings, which implies a range of about 18 points either up or down. This iron condor covers a range of twice that, and is protected by key support and resistance levels.

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RISK/REWARD
If AMZN doesn’t move as much as what the options are pricing in, this position will benefit from the non-move as well as a drop of implied volatility. The risk of this trade is a blowout in either direction going into earnings.

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Read more trading ideas in our daily Markets section.