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Earnings Options Strategy | AWS Expected to Accelerate, ARK Invest's 'Wood' Adds Shares Pre-Earnings, How to Position for Amazon’s Earnings After-Hours?

$Amazon (AMZN.US)$ Amazon is set to release its earnings report after the market closes on February 5th, Eastern Time.The key highlights of this earnings report will focus on two main themes:First, the revenue acceleration and capital expenditure guidance for AWS driven by the AI wave; second, the strong performance of the e-commerce business during the holiday shopping season and the resulting margin expansion.

After the last quarterly report, Amazon's stock price surged by 10% on the earnings day.The options market implies a volatility of ±8.39% for this earnings day. Before the earnings on January 30, ARK, managed by Cathie Wood, increased its stake in Amazon, purchasing 8,088 shares.（《Tracking Cathie Wood: ARK buys into crypto basket, purchasing Bullish, Circle, and 5 other companies; increases stake in Amazon before earnings 》）。Several major Wall Street firms, including JPMorgan, Bank of America, and Citi, are optimistic about Amazon's earnings report.Will Amazon achieve another strong performance in this earnings report?

First, let’s look at the consensus expectations for key financial metrics:

– Institutional forecasts predict that Q4 2025 revenue will reach $211.172 billion, a year-over-year increase of 12.45%. The company previously guided Q4 revenue to be between $206 billion and $213 billion (a year-over-year growth of 9.7% to 13.4%).This suggests that institutional forecasts are more conservative and closer to the lower end of the company’s guidance.

– Earnings per share are expected to be $1.954, a year-over-year increase of 5.03%.

Amazon’s business structure is comprised ofRetail, cloud computing, advertising, and subscription serviceswith revenue divided into Online Stores, Third-Party Seller Services, Amazon Web Services (AWS), Advertising Services, Subscription Services, and Physical Stores.

Amazon’s business logic involves leveraging its retail operations to capture massive user traffic and data, using Prime memberships to lock in customer loyalty, and ultimately driving profitability through two high-margin engines: advertising and cloud computing (AWS).

Earnings focus: Monitor AWS’s growth rate; strong demand for retail and advertising businesses is expected to remain robust.

AWS: AI-driven revenue is expected to accelerate further. Focus on the order backlog indicator and capital expenditures.

Investors should focus particularly onwhether AWS cloud business revenue growth can continue to accelerate, which is currently the most critical factor in shifting Amazon’s valuation center, and has almost become the overriding single indicator.In the previously released earnings report,$Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$the cloud revenue for the quarter exceeded analyst expectations by more than 9%, $Microsoft (MSFT.US)$ however, the growth rate of the core cloud business Azure has slowed instead of increasing, and Amazon's AWS growth rate will reshape the market’s perception of the cloud business landscape.

Last quarter saw AWS revenue growth finally pick up, with a year-over-year increase of 20.2%, an acceleration of 2.7% from the previous quarter, surpassing market expectations. This outperformance was likely due to some easing of AWS’s compute capacity bottlenecks, as well as increased compute demand driven by its partnership with Anthropic.

The market widely expects its revenue this quarter to increase by 21.2% year-over-year, implying a continued acceleration on a quarter-over-quarter basis.The momentum stems from AI collaborations with Anthropic and OpenAI, the launch of the Trainium3 chip, and a plan to double computing power supply by 2027. This stance by management contrasts sharply with their previously cautious tone due to ongoing supply constraints. Attention should also be paid to the financial metric 'remaining performance obligation,' which refers to the backlog of sales that the company will recognize from multi-year contracts.The 'backlog of orders' is an excellent leading indicator, especially when it diverges from the direction of revenue growth, prompting investors to pay closer attention.

The risk to watch for lies in Amazon potentially ramping up its capital expenditure to support this long-term growth.Amazon may expand its capital spendingAggressive investment in the short term may trigger market discussions about cash flow and lead to a year-on-year contraction in AWS's operating profit margin this quarter.Google's massive spending plan of over $180 billion has just spooked the market. Now it’s Amazon’s turn. If a significant increase in forecasted spending is not accompanied by a demonstration of robust growth in AWS to justify it, this would be a negative signal.

2. Retail Business: A winner during the holiday season, focus on the penetration of AI shopping assistants

In terms of e-commerce,credit card spending data shows that the fourth-quarter holiday shopping season appears stronger than expected.According to reports from Visa (V) and Mastercard (MC), U.S. e-commerce holiday spending achieved high single-digit growth. Data from Sensor Tower also corroborates this: despite the peak traffic dividend in mature markets, Amazon's global app saw a 5% year-over-year increase in monthly active users in December (4% year-over-year growth in October and 5% in November).

Given Amazon's high penetration rate in these categories and its growth rate significantly outpacing the industry average,This trend is expected to support robust growth in Amazon's North American retail business, providing a floor for Q4 earnings performance.

The market is closely watching Amazon's moves in the Agentic Commerce space (i.e., AI-driven shopping agents). With the application of the AI shopping assistant Rufus, this new interaction model is expected to become a key theme in boosting conversion rates by 2026. Meanwhile, the penetration rate of the grocery business is also increasing, with growth in high-frequency consumption categories effectively enhancing user stickiness.

3, Advertising: High profitability, robust demand for Q4 advertising business expected

Advertising is one of Amazon's most efficiently monetized businesses, with revenue consistently growing over 20% quarter-on-quarter in recent quarters.From an overall macroeconomic perspective, there is strong demand for the advertising business in Q4, which can be corroborated by Meta's Q4 earnings report.

As Amazon's Authenticated Graph (which integrates user data from Prime memberships, the retail platform, etc., forming a structured user identity and behavioral relationship graph that empowers precise ad targeting) covers 90% of households in the U.S. and expands to Prime Video and third-party streaming platforms (such as Roku, Disney, Spotify), both its ad inventory and conversion rates are improving, with expectations for continued strong growth this quarter.

Options strategy

As of the close on February 4, 2026, Amazon (AMZN.US) stock price was $233.49. Technically, Amazon (AMZN.US) currently presentsa range-bound trading pattern.The price is hovering near the major moving averages, with trading volume at the recent average level. Short-term technical signals are showing a 'neutral' status, but some indicators have entered the oversold zone. The short-term support level is around $230, while resistance levels are approximately between $235 and $240.

Meanwhile, the options market signalsExpectations of increased volatility and bullish trading sentimentAs of January 30th, the options market implied volatility for this earnings day was 8.39%, with an overall implied volatility of 50.13%, which is at a relatively high level over the past year (95th historical percentile), making option prices expensive. The Put/Call ratio (volume) stands at 0.57, indicating bullish sentiment in market trading.

(1) Bull Put Spread - Moderately Bullish

Based on the technical sideways consolidation + extremely high volatility premium + bullish sentiment background, investors who are optimistic about post-earnings performance can utilize a Bull Put Spread to short volatility while maintaining a bullish directional bias.

This strategy is suitable when expecting that the underlying stock will not decline or may rise slightly but with limited upside potential.In essence, this strategy represents a 'low-risk Short Put option strategy,' bearing characteristics of an option seller. Upon opening the position, the premium is received upfront, resulting in lower initial costs. Therefore,It is ideal to construct this strategy when implied volatility is high, as profits can be made even if the stock remains stagnant, consolidates sideways, or experiences range-bound fluctuations, creating a strategy with both limited gains and losses.

The construction involves two Puts: 'selling' an out-of-the-money Put at a higher strike price (to collect substantial premiums) while simultaneously 'buying' a cheaper Put (as protection). Both Puts share the same expiration date, strike prices, and contract quantities. When the stock price rises above the higher strike price, both options remain out-of-the-money, achieving maximum profit equal to the total premium collected upon initiation. If the underlying stock falls, the cheaper Put acts as a hedge, limiting maximum loss.

With the current IV Rank at 98%, it creates a 'favorable environment' for this strategy.At this time, the premiums for Puts are quite generous, meaning they are priced higher and can be sold at better valuations.

(The illustration is for demonstration purposes only and does not represent any investment advice; market conditions fluctuate frequently, and the option prices shown do not reflect real-world scenarios.)

(2) Single-leg long call option purchase (Long call) - Leveraging small capital for potentially large returns

If investors are aggressively bullish on Amazon's earnings report and anticipate that the stock's rise may exceed the current market expectation of 8.39%, they can consider purchasing a single-leg long call option. When the stock price rises significantly, the profit for call option holders will also increase accordingly.

However, investors should be aware that volatility is relatively high at this time, and a single-leg purchase will face risks related to significant time value decay and volatility erosion. Under unchanged conditions, options further from the expiration date are more expensive, while those closer to expiration lose their time value faster. This strategy is suitable for investors who have strong confidence in the underlying stock, seek to leverage small capital for potentially large returns, and are also prepared to accept potential losses on the premium. Investors should also focus on timely stop-loss measures and securing profits when appropriate.

(3) Protective put option (Protective put) - Hedging against sharp declines while holding a position

Based on the post-earnings performance of companies that have released their results this week,the market has set strict standards for financial performance. Even if overall quarterly results surpass expectations but contain flaws or lack sufficient forward guidance, companies may still face significant punishment from the market., such as $Advanced Micro Devices (AMD.US)$ and $Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$ 's post-earnings performance.

Given the current fragile market sentiment, if investors already hold a position, remain optimistic about Amazon in the long term, but are concerned about extreme downside risks associated with the earnings report, the most direct hedging approach would be to purchase insurance for your portfolio by buying put options.

The protective put strategy consists of two parts: buying the stock while simultaneously purchasing a put option, with the number of shares bought matching the number of shares covered by the put. When the stock price rises as expected, the profit from this strategy is slightly lower than simply buying the stock because of the added 'premium' cost. If the stock price falls below the strike price of the put option, the investor can choose to exercise the option and sell the shares at the strike price of the put.This allows the investor to limit the downside risk of the stock price at a relatively small cost (the cost of purchasing the put option).

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Disclaimer

This content does not constitute any offer, solicitation, recommendation, opinion, or guarantee of any securities, financial products, or tools. The risk of loss in buying and selling options can be substantial. In some cases, your losses may exceed the initial margin amount deposited. Even if you set contingent orders, such as 'stop-loss' or 'limit' orders, these may not necessarily prevent losses. Market conditions may make these orders unexecutable. You might be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be responsible for any account deficit arising from this. Therefore, before trading, you should study and understand options and carefully consider whether such trading suits you based on your financial situation and investment objectives. If you trade options, you should be familiar with the procedures upon exercising options and at expiration, as well as your rights and obligations when exercising options and at expiration.

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