Amazon options trade targets rebound in U.S. tech laggard

Traders Union
All News
Financial News
Amazon options trade targets rebound

Highlights

Technical indicators including accelerated MACD, RSI, and DMI signal a potential Amazon recovery, with institutional buying suggested by sharply rising RSI after near-oversold levels in June.
Maya, Pant's rules-based technical algorithm, has been backtested with a 10-year history and produced approximately 42% return on investment since its April 2025 launch.
The recommended AMZN 240-245 bull call spread, with stock at $240.14 and Jun 24 expiry, costs $250 per contract for a maximum $250 profit if shares exceed $245.

Technical signals behind the trade

Nishant Pant says in CNBC Investing that the proposed Amazon setup is based on an accelerated MACD, the relative strength index and the directional movement index, all of which are pointing to a possible recovery move. He argues that while the MACD is showing a bullish crossover, the tightly coiled MACD and signal lines can still produce false positives, making additional confirmation necessary before taking the trade.

Pant says the RSI has hovered near oversold territory through June and is now turning sharply higher, which he interprets as a sign that institutional money is beginning to return to Amazon. He also points to the DMI, where the gap between buyer and seller lines is narrowing, with a crossover potentially signaling an early structural change in trend.

The commentary also references Maya, Pant's rules-based trading algorithm, which he says is built entirely on technical analysis. He says the system has been backtested over the last 10 years and has delivered near 42% return on investment since its launch in April 2025.

Risk-reward structure for Amazon spread

The trade idea uses an AMZN 240-245 bull call spread with the stock trading around $240.14. Pant says the position can be entered for about $2.50, or $250 per contract, by buying the $240 call and selling the $245 call with a Jun 24 expiry.

At that pricing, the strategy risks $250 per contract for a potential profit of $250 if Amazon rises above $245 by expiration. Pant says a four-contract position would put $1,000 at risk for a possible $1,000 gain, highlighting the appeal of the trade for investors looking for a defined-risk way to express a bullish view on a catch-up move in Amazon shares.

In our earlier coverage of bubble-risk warnings around the U.S. stock rally, we highlighted how elevated valuation gauges and sharp swings in technology and semiconductor names were raising concerns about fragility in parts of the market. We noted that while sentiment has stayed broadly supportive and market breadth has improved, strategists continued to urge caution given how much high-margin growth is still priced in.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.