Amazon's Earnings Gamble: Bullish Call Options Signal Confidence in a Volatile Market
18min read Amazon’s upcoming Q1 2025 earnings report on May 1 has sparked intense activity in options markets, with traders placing big bets on the stock’s direction. While the company’s recent rebound to $186 per share has fueled optimism, a closer look at the data reveals a market torn between bullish confidence and lingering macroeconomic concerns.
Earnings Loom: What’s at Stake?
The May 1 earnings report will test whether Amazon’s recent momentum can hold. Analysts project Q1 revenue of $155.1 billion, a 7.8% year-over-year increase from 2024’s $143.3 billion. A key focus will be the performance of Amazon Web Services (AWS), which JPMorgan analysts say could see revenue growth slow to 16% in 2025—down from 19% in 2024—due to macroeconomic headwinds. However, optimism around AI-driven demand and margin improvements could offset this.
Meanwhile, tariff risks loom large. While softened U.S.-China trade tensions have eased near-term pressure, analysts warn that tariffs could still dent gross merchandise value (GMV) in the second half of 2025.
Call Options Surge: Bulls Bet on a Rebound
The most striking pre-earnings activity is a $11 million block trade in 251,000 call options with a $180 strike price, expiring in 784 days. This suggests buyers are betting on Amazon’s stock climbing further—a bold call given its recent climb from an eight-month low. At the time of the trade, shares were near $186, implying traders expect sustained growth.
But the market isn’t all bullish. A simultaneous $4.02 million put options trade—allowing the sale of 190,000 shares at $180 by June 18—reflects lingering skepticism. This tension underscores the high stakes: if earnings miss expectations, the put buyers could profit while call holders face losses.
Data Deep Dive: Historical and Forward-Looking Signals
This comparison would reveal whether Amazon’s recent gains are a standalone story or part of a broader tech rebound.
A chart here could show Amazon’s consistency in beating or missing estimates, offering clues about how the market might price in this quarter’s results.
AWS: The Engine of Growth?
Amazon’s cloud division remains its growth crown jewel. AWS’s margin improvements and AI adoption—like its Bedrock platform—could justify the bullish call activity. The would highlight its disproportionate impact on the company’s bottom line.
Risks: Tariffs and Margin Pressures
Even as AWS shines, Amazon’s retail segment faces tougher odds. Analysts estimate North American online sales at $64.35 billion for Q1, but rising tariffs on Chinese imports could squeeze margins. The company’s ability to offset these costs through market share gains (it now holds ~40% of U.S. e-commerce) will be critical.
Conclusion: A High-Reward, High-Risk Gamble
The call option frenzy suggests traders are pricing in a positive earnings surprise—one that could propel Amazon’s stock higher. The $11 million bet on $180 calls makes sense if AWS growth holds near 16% and tariffs don’t crater GMV. However, the put activity underscores a market aware of the risks: slowing consumer spending, margin pressures, and AWS’s dependency on enterprise demand.
For investors, the key metrics are clear: if Amazon beats revenue estimates by at least 3% and AWS growth stays above 15%, the bulls win. But if tariffs bite harder than expected or AWS falters, the puts could dominate. With shares near $186, this is a pivotal moment for a stock that’s defied skeptics for decades—but where the gap between bullish calls and bearish puts is wider than ever.
Final word? The data leans bullish—but don’t ignore the 40% of traders hedging with puts. This is Amazon’s moment to prove it can grow its way out of a volatile market.
