Tech giant Amazon oddly got knocked down a peg after its solid earnings report and the adverse reaction by investors pushed the shares back into negative territory for 2025. I believe this is an opportunity to create a short-term income stream as this essential name should see buyers come in at this discount. AMZN YTD mountain Amazon, YTD The e-commerce behemoth announced its second quarter earnings after the bell on Thursday, beating both on the top and bottom lines and offering better-than-anticipated Q3 revenue guidance of between $174 billion and $179.5 billion. However, the shares are tumbling after Amazon’s guidance for operating income at its AWS cloud computing unit came in light at $15.5 billion to $20.5 billion for the third quarter. Investors are looking for north of $19 billion at least. AI worries The AI undercurrent seemingly was the part of the earnings call that soured investors. CEO Andy Jassy faced tough questions about how AWS is addressing competition from its cloud computing rivals. Brian Nowak, an analyst from Morgan Stanley , asked Jassy to respond to the Wall Street narrative that “AWS is falling behind” in the generative AI race and losing share to its competitors. Jassy said it was “early” in the AI space and that the industry was “top-heavy.” Trade tariff headwinds were addressed too as Jassy stated, “we haven’t yet seen diminishing demand, nor prices meaningfully appreciating.” As I believe volatility will persist around the Mag 7 names, I want to use this downdraft as an opportunity to create a revenue stream in AMZN. I am selling a put spread to capitalize and capture this heightened volatility in this $2.3 trillion company. The Trade (selling a put spread) Sold the AMZN Aug. 29 $215 put for $5.25 Bought the AMZN Aug. 29 $200 put for $1.35 This put spread was executed while AMZN was roughly trading $218 This credit spread collects $3.90 or $390 per one spread In the event AMZN continues to go lower and closes under $200 at the end of August, an investor’s downside is capped at $11.10 per spread, or $1,110. If AMZN settles above $215 by the end of the month, an investor will collect the full $390 per spread, an annualized return of nearly 22%. DISCLOSURES: (Long AMZN, sold spread) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
