Amazon.com (NASDAQ:AMZN) sells a wide range of products through its global Websites: www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.fr, www.amazon.co.jp and www.amazon.ca. The company offers new, used, refurbished and collectible items, in categories such as apparel, shoes and accessories, home, garden and outdoor living products, baby care products, jewelry and watches, books, kitchenware and housewares, camera and photography, magazine subscriptions, cellular telephones and service, music, computers and computer add-ons, office products, consumer electronics, software, DVDs and videos, sports and outdoors, gourmet food, tools and hardware, health and personal care and toys. Amazon also utilizes its e-commerce services, features and technologies to sell its products through other businesses' websites.
Shares of AMZN were one of the few "big" losers during the past week, plunging over 15% after the online retail giant posted earnings that fell short of consensus expectations. Analysts also noted that the company's 2005 profit forecast was less than inspiring and a number of brokerages subsequently reduced their ratings on the issue. From a technical viewpoint, AMZN has dropped below a recent trading range near $38 and until a new catalyst (for buying) emerges, it will likely remain in a lateral trend with overhead resistance near the sold (call) strike at $40.
PLAY (less conservative - bearish/credit spread):
BUY CALL MAR-42.50 ZQN-CV OI=2847 ASK=$0.20
SELL CALL MAR-40.00 ZQN-CH OI=1626 BID=$0.45
INITIAL "NET-CREDIT" TARGET = $0.30-$0.35
POTENTIAL PROFIT (X 5 contracts) = $150
RETURN ON INVESTMENT (max) = 14%
COST BASIS = $40.25
LOSS-LIMIT/EXIT POINT = $38.75 (cons) - $40.00 (aggr)