To The Moon

$Amazon.com(AMZN)$  

Amazon: great business, heaviest spending cycle ever, and what it means for my sell puts

Amazon is the strongest Tier 1 name I've scored so far, and I still won't sell a put on it today.

The operating business is excellent. Q2 sales were $200.6B, up 20%, and operating income was $27.5B, up 43%. AWS grew 37%, its fastest since 2021, at a 39.4% margin. That's 21% of sales but about 60% of operating profit.

The reported profit is a different story. Q2 net income was $62.6B, but $53.4B of pre-tax income was non-operating, mostly gains on the Anthropic stake. These are real but non-cash and can reverse. Strip them out and Amazon trades at about 31.6× 2026 and 25.1× 2027 earnings, not the 20× on the screen.

Cash is the other watch item. Operating cash flow is a record $161.4B, but net capex is $169.0B, so trailing free cash flow is −$7.6B. Capex is guided to about $220B this year, roughly 136% of operating cash flow. Consensus has 2026 free cash flow near −$34B. The number I'll track each quarter is operating cash flow minus capex.

My scorecard gives it 69/100, fifth of eighteen in my series.

My sell-put gates at $262.43 (Friday's close):

200-day SMA ($242.15): pass, spot is 8.4% above.

Moving-average zone: amber, because the 50-day is turning down.

Volatility: pass. IVR is 59, IVP 71, and IV÷HV about 1.5. The print inflates these, so expect them to fall afterwards.

Earnings: fail. Q3 is expected around 29 Oct after the close, so the 20 Nov monthly spans it.

Sizing: a strike near $235 ties up $23,500. That's above my $12,500 Amber half-cap, so it's only a flagged exception.

The window opens 3–18 Nov for the 18 Dec monthly, with a strike zone of $225–235. It only works if IV stays around 35% or higher after earnings. At 30%, a 10%-OTM strike falls below my 0.15 delta floor and pays only about 6%.

Personal framework, not investment advice.