DailyPlay – Opening Trade (AMZN) – April 3, 2025

AMZN Bearish Opening Trade Signal

Investment Rationale

The recent announcement of sweeping tariffs, including a baseline 10% on all imports and higher rates for specific nations, poses significant challenges for Amazon.com Inc. (AMZN). The company’s extensive reliance on a global supply chain, particularly imports from countries facing steep tariff increases, is likely to drive up operational costs and pressure profit margins. Additionally, potential consumer demand shifts due to rising prices may weigh on AMZN’s top-line growth.

Following the tariff announcement, AMZN’s stock experienced heightened volatility, reflecting investor concerns over potential cost increases and supply chain disruptions. The stock has been on an extended losing streak, declining approximately 22% from its February 4 high of $242.52. This sustained downtrend suggests bearish sentiment, with AMZN trading below key moving averages and approaching critical support levels. A break below $190 could accelerate further downside toward the $165 target.
The impending tariffs are expected to negatively impact Amazon’s financial performance by increasing the cost of goods sold and potentially reducing consumer demand due to higher prices. Key financial metrics include:

• Forward P/E Ratio: 31.75x vs. Industry Median 20.92x
• Expected EPS Growth: 18.32% vs. Industry Median 8.74%
• Expected Revenue Growth: 9.98% vs. Industry Median 4.82%
• Net Margins: 9.29% vs. Industry Median 11.18%

Amazon’s valuation remains elevated, with a forward P/E ratio of 31.75x, significantly higher than the industry median of 20.92x. While the company boasts strong growth prospects, with expected EPS growth of 18.32% and revenue growth of 9.98%, both exceeding industry averages, its profitability lags behind peers. Amazon’s net margins stand at 9.29%, lower than the industry median of 11.18%, highlighting 

To capitalize on the bearish outlook, consider a bear put vertical spread: Buy AMZN May 16, 2025, 200/175 Put Vertical. The setup benefits from a continued decline in AMZN’s stock price while limiting downside risk in case of a reversal.

AMZN – Daily

Trade Details

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish Debit Spread

Details: Buy to Open 2 Contracts AMZN May 16 $200/$175 Put Vertical Spreads @ $8.55 Debit per Contract.

Total Risk: This trade has a max risk of $1,710 (2 Contracts x $855) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $855 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to continue lower over the duration of this trade.

1M/6M Trends: Bearish/Bearish

Relative Strength: 7/10

OptionsPlay Score: 132

Stop Loss: @ $4.28 (50% loss of premium)

View AMZN Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Wednesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View AMZN Trade