Friday, January 13, 2012

Amazon and it's Next Big Move coming up this Earnings Season

I already have a small feeler stake in Amazon - but now with the earnings profile coming out in the last week of January - We are starting to see the volume pick up in this name.

The importance of this earnings figure is based on it's latest Kindle Fire coming into market in the past few weeks in the US - and how this will be impacted across it's bottom line in terms of cost per unit and how much impact it's had on it's digital listings.

Anytime a new questionably low margin product comes to market - especially when it's hardware and there's been much $ thrown into the equation - we're going to see some price volatility post the first iteration of it's sales in the market - how the analysts will dissect the numbers and consequently how the traders will trade the number will be very interesting.

My personal bias is that you're going to see minimal addition to bottom line results, but obviously a boost in topline numbers - we're going to see how much capex has gone into developing this product. However the key is looking at the sales in its digital base - and if this has responded significantly then we may see some hardcore buying in this name.

I've set up the position by entering long calls at 180, and long puts at 175 - setting up a strangle to profit from a this price volatility in the coming weeks.