Price Forecast:

Bullish Case: Amazon's robust performance in cloud services and advertising, coupled with successful holiday campaigns, positions it for strong Q4 earnings, suggesting potential price recovery toward $225.

Bearish Case: Market uncertainties, including rising competition and consumer price sensitivity, may suppress sales growth, risking a downturn towards $180 if retail margins shrink significantly during the holiday season.

Potential Outcomes:

1. Positive Q4 earnings surprise (65% chance) boosting price above $220;

2. Regulatory scrutiny impacts stock (30% chance) leading to further declines;

3. Consumer spending drops, affecting sales (50% chance) pushing shares toward $190;

4. Strong holiday sales increase Prime memberships (70% chance) supporting growth into 2025.

Trading Oracle: Adopt a bullish bias by implementing a debit spread: buy $205 call, sell $210 call expiring in 7 days. This strategy leverages anticipated price recovery with high reward:risk. Given current volatility levels, consider a delta-neutral position to capitalize on upcoming earnings and potential positive shocks. Execute efficiently to maximize alpha.

November 21, 2024