Amazon continues to grow the topline at an impressive rate. FY 2026 revenues are estimated at more than $828 billion, more than 2.5% of US GDP, and 15.5% YoY growth. Despite the solid rate of growth, the company trades at a near-market multiple of just 22x FY 2027 adjusted EPS estimates of $12.35/share.
The ho-hum multiple may in part be a function of investor concern about the astonishing investments the hyperscalers are making. Amazon’s FY2027 CapEx is nearly $280 billion. If these enormous investments don’t bear fruit, that would indeed be a painful blow, but one should remember that Amazon’s FY2027 forecast EBITDA is also north of $280 billion. Translation? The company can afford the investment, and is as well positioned to monetize it as anyone.
Amazon, YTD
The trade: Jade lizard
For investors who suspect Amazon could be range-bound for the next seven weeks, consider a “jade lizard”: a short strangle (short put and short call) combined with a higher-strike long call, which serves as a hedge.
The bet you’re making? That Amazon does not hit new all-time highs between now and late September, or alternatively is unlikely to fall through its pre-earnings levels.
In the worst-case scenario, one would either be compelled to purchase the stock at approximately the pre-earnings price, which we’ve already identified is quite reasonable, or alternatively take a modest risk if the stock should hit all-time highs, capped by the higher strike long $320 call.
Trade details:
- Sell 240 Sep 25 Put
- Sell 300 Sep 25 Call
- Buy 320 Sep 25 Call
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