Amazon Bull Put Spread Sees Attractive Entry Point Ahead of 2027 Rally
Amazon's share price has dipped to 10.59% below its 52-week high, but investors see an attractive entry point for the tech giant.
The stock is up 11.25% year-to-date and could continue to remain strong into early 2027, making it a good bullish candidate for the remainder of the year.
One strategy for taking advantage of this potential rally is the bull put spread trade, which involves selling an out-of-the-money put and buying a further out-of-the-money put.
In this case, investors could sell the March 29 put with a strike price of $210 and buy the $200 put, creating a bull put spread that was trading on Friday for around $1.70 per contract.
This represents a premium of $170, which would be received by the trader selling the spread, but the maximum risk is capped at $830 if Amazon's stock closes below $200 on the expiration date in March 2027.
The breakeven point for this trade is $208.30, calculated as $210 less the $1.70 option premium per contract.