Investment Review №330. Profit favors the bold
LONG CALL ON AMZN
Investment Rationale
Amazon (AMZN) — a global retailer and cloud giant: combines massive online retail, high-margin cloud (AWS) and a fast-growing advertising business (Amazon Ads). AWS remains the primary driver of profitability and demand for computing power for AI; advertising provides high margins, and retail generates a large flow of GMV. The company is actively investing in infrastructure (data centers, logistics), which raises capital expenditures and makes free cash flow dynamics sensitive to project payback timing.
Investment Idea
Buying a call option with a $225 strike is a tactical bullish bet on confirming the positive scenario: strong demand for AWS/AI infrastructure, acceleration of advertising revenues, and successful seasonal commerce (including Prime Big Deal Days and holiday preparations). Expiration on December 19 provides a window for these catalysts to play out and for margin improvements to be recognized; downside is limited to the $13.40 premium paid.
| Strategy | Long Call |
| Ticker of the Underlying | AMZN |
| Recommendation | BUY |
| Strike and Option Type | CALL $225 |
| Expiration Date | 19.12.2025 |
| Current Price (Mid) | 12,875 |
| Strategy Cost | $1287,50 |
| Greek Parameters | Delta – 0,505 Gamma – 0,012 Vega — 0,397 Theta – -0,105 |
| Implied Volatility | 34,94% |
| Realized | 1М – 21,51% 3М – 27,86% 6М – 35,19% 12М – 33,57% |
P/L of the option strategy
Trade Parameters
| Strategy | Long Call on AMZN |
| Strike | Long CALL 225 |
| Buying | +AMZN*FCJ225 |
| Exp Date | 19.12.2025 |
| Margin Requirement | $1288 |
| Entry Price | $2100 |
| Max Prifit | $Inf |
| Max Loss | $(1288) |
| Expected return | 63% |
| Breakeven Point | $237,88 |
Position Management
If on the expiration date of December 19, 2025, the underlying asset’s price is above $225 but below $237.88, the investor will incur a variable loss. If the underlying asset’s price falls below $225, the investor will face the maximum loss of $1,288. If the underlying asset’s price rises above the breakeven point of $237.88, the potential profit is unlimited. However, we recommend closing the position once the call option reaches a value of $2,100.