Amazon.com, Inc.

(NASDAQ: AMZN)
Report Date: July 17, 2024

Amazon is a leading online retailer and one of the highest-grossing e-commerce aggregators, with $386 billion in net sales and approximately $578 billion in estimated physical/digital
online gross merchandise volume in 2021. Retail-related revenue represents approximately 80% of the total, followed by Amazon Web Services' cloud computing, storage, database, and
other offerings (10%-15%), advertising services (5%), and other. International segments constitute 25%-30% of Amazon's non-AWS sales, led by Germany, the United Kingdom, and Japan.

Option Strategy Summary

The AMZN Aug 2, 2024 covered call with a $195.00 strike price could potentially yield a 4.88% return if AMZN stays above $195.00 a share at expiration 17 days from now. A diagonal
spread that involves selling the Aug 2, 2024 $195.00 call and buying the Oct 18, 2024 $170.00 call should cost $164.12 less per share than the covered call and potentially yield a 14.68%
return if the stock stays above $195.00 through expiration. The lower return covered call has a 5 Key (Lowest Relative Risk) ranking while the diagonal spread has a riskier 2 Key
(Considerable Relative Risk) ranking. On 05/02/24, Argus Research set a $205.00 12-Month price target for AMZN, which is currently trading at $11.98 below that target. By using this
covered call strategy potential returns may be higher than simply holding the stock if AMZN stays below $202.45 through Aug 2, 2024. With the diagonal spread strategy, the trade cost could
be reduced and returns potentially improved if the stock stays above $191.80 but lower than $221.35 through Aug 2, 2024. The covered call strategy offers limited protection if the stock
drops in price, but if the stock goes below $185.92 expect losses.

Argus Rating: BUY Covered Call Strategy Diagonal Spread Strategy

Rating since: 05/02/24
Buy Side
Current Price: $193.02
Stock Symbol AMZN Bought Call Ask Price $28.90
Target Price $205.00 Stock Price $193.02 Bought Call Month 10/18/24
Bought Call Strike Price $170.00
M arket Cap $2005.6 billion
Sell Side
Dividend —
Sold Call Expiration 08/02/24 Sold Call Expiration 08/02/24
Yield — Sold Call Strike Price $195.00 Sold Call Strike Price $195.00
Current Sold Call Bid Price $7.10 Current Sold Call Bid Price $7.10

Key Metrics
Option Strategies Risk Assessment
Net Debit $185.92 Net Debit $21.80
Covered Call Risk Ranking Lowest Downside Protection ($) $7.10 Downside Protection ($) $1.22
Downside Protection (%) 3.68 Downside Protection (%) 0.63
Our 5 Key (Lowest) Relative Risk assessment for this covered call reflects the volatility of In-the-Money (%) -1.03 In-the-Money (%) -1.03
AMZN. As with any stock or option strategy there is always a risk of losing money. If AMZN Break Even 185.92 Break Even 191.80
heads downward for any reason, only $7.10 of that drop will be protected using this Assigned Return ($) 9.08 Assigned Return ($) 3.20
strategy. If AMZN is selling for over $202.45 at expiration, holding the stock without selling
the call would have yielded a higher return. Assigned Return (%) 4.88 Assigned Return (%) 14.68
Ann. Assigned Return (%) 104.86 Ann. Assigned Return (%) 334.86
See elsewhere in this report for a further discussion of potential risks related to the Expiration Date 08/02/24 Expiration Date 08/02/24
Covered Call Strategy.
Trade Duration (Days) 17 Trade Duration (Days) 17
Strategy Risk Ranking 5 Strategy Risk Ranking 2
Considerable Equivalent Stock Only Equivalent Stock Only
Diagonal Spread Risk Ranking 202.45 221.35
Appreciation Appreciation
The Diagonal Spread Strategy will normally carry more risk than a Covered Call Strategy,
but the rate of return is generally higher, since there is a lower capital outlay. Option Strategy Comparison
At a 2 Key risk ranking this strategy is considered to have Considerable relative risk. If the Expected Stock Price At Expiration Best Strategy
stock price at expiration is below $195.00 this strategy will not generate the potential
More Than $227.23 Buy Stock
returns shown. Another risk for this strategy is related to the bought call option price. If the
stock drops in price between now and expiration date, there is a possibility that the Less Than $221.35
Diagonal Spread (Minimum Return)
10/18/24 $170.00 call could drop quickly. More Than $191.80
Less Than $202.45
See elsewhere in this report for a further discussion of possible risks related to the Covered Call
More Than $185.92
Diagonal Spread Strategy. Do Not Buy Stock
Less Than $185.92 Do Not Do Covered Call
May Sell Stock If Owned
Diagonal Spread
Less Than $227.23 (Maximum Return)
More Than $185.92 Assumes Long Call
Retains Time Value

Argus Opinion
Over the past year Amazon.com, Inc. shares are up 45.3% versus a gain of 24.4% for the broader market. The 52 week trading range is $118.35 to $201.20. Argus has a BUY rating on the
stock. The Argus target price is $205.00 representing a 6.21% gain from the current level.

©2024 Argus Research Company ARGUS Option Report

Amazon.com, Inc.
(NASDAQ: AMZN)
Report Date: July 17, 2024

Cover ed Call Long Call

Glossary An option strategy in which a call options is written against an
equivalent amount of long stock. Ex ample: writing 10 ABC May
Buying a call on a stock results in a "long call" position. An
investor buys a long call on a stock they think is going to be
70 calls while owning 1,000 shares or more of ABC stock. rising.
100-Day Moving Aver age
A 100 day simple moving average is the average closing price of Cur r ent Sold Call Bid Pr ic e Net Debit
the stock over the last 100 trading days. Moving averages can be The price at which a buyer is willing to buy an option or a stock. The amount of premium that you pay when doing a spread
used to gauge the direction of price movement in a stock. This is the most you may receive for a sold call option. transaction. It is a negative difference between the option(s) sold
price(s) and option(s) bought price(s), such that you still pay
12-Month Tar get Pr ic e Diagonal Spr ead Assigned Retur ned money for the transactions.
The Argus equity analyst's projection of the market price a given This is the percent return for the position if the short term option is
security will command 12 months hence. ITM at ex piration and the longer term option is ex ercised to cover Option Str ategies Disc ussion
the trade. The option strategies discussion section translates the option
200-Day Moving Aver age strategies section into common English. It guides you through
A 200 day simple moving average is the average closing price of Diagonal Spr ead Minimum Retur n several critical factors that our analysts like to consider and then
the stock over the last 200 trading days. Moving averages can be If the stock ex pires above the short call; this is the percent return shows the returns on the different trades.
used to gauge the direction of price movement in a stock. for the position assuming both options are ex ercised at ex piration.
Option Str ategy Summar y
50-Day Moving Aver age Diagonal Spr ead Max Retur n This is the ex ecutive summary of the report it shows the precise
A 50 day simple moving average is the average closing price of This is the potential percent return for the position if the short term returns and cost of both the covered call and diagonal spread
the stock over the last 50 trading days. Moving averages can be option is ITM at ex piration and the longer term option retains its trades.
used to gauge the direction of price movement in a stock. time value. One may buy to close the call before ex piration, buy
back the option and sell one in a farther out month (called rolling Sell-Side
52-Week High the option), or buy stock to cover and then sell another call against Many trades have multiple parts to a transaction in a covered call
This is the highest price that a stock has traded at during the last the farther out option. you buy may buy the stock and then sell the option. The Sell side
52 weeks. indicates the option and symbol that you are selling.
Diagonal Spr ead Risk Assessment
52-Week Low The diagonal spread risk assessment and Key ranking is a Sold Call Month
This is the lowest price that a stock has traded at during the last proprietary indicator to help assess the risk of a potential trade. All This is the ex piration month of the sold call option.
52 weeks. option trades generate a Key ranking from 1 Key (high relative risk)
to 5 Keys (lowest relative risk). Sold Call Str ike Pr ic e
Annualized Assigned Retur n (%) This is the strike price of the sold call. When you sell an option
The process of taking a return and multiplying it by a factor to Diagonal Spr ead Risk Ranking you are selling the right (or option) for the purchaser to buy the
simulate the return on an yearly basis. The return is multiplied by This proprietary risk ranking is similar to the covered call risk stock from you at the strike price.
365 then divided by the number of days to ex piration. This return ranking and rates Diagonal spread trades from 1 (high risk) to 5
is always given for comparison purposes only. Keys (Lowest relative risk.) Sold Call Symbol
This is the option symbol of the call that you are selling.
Annual Dividend Yield Diagonal Spr ead
A company's yearly dividend amount shown as a percentage of its An option strategy involving the purchase of a longer-term call or Stoc k Resistanc e
stock price put option and selling an equal number of shorter-term options of A term used in technical analysis to describe a price area at which
the same type and strike price. A diagonal spread may also be rising prices are ex pected to stop or meet increased selling
Assigned Retur n (%) activity. This analysis is based on historic price behavior of the
The potential return from selling an option if the stock price is in called vertical, horizontal, or diagonal spread when the strike
prices vary. stock.
the ex ercisable range. In the case of a covered call, this return
would include the premium from the sold option and any profit/loss Downside Pr otec tion Stoc k Suppor t
on the covering stock position and assumes the stock price is Downside protection refers to the dollar amount a stock can drop A term used in technical analysis to describe a price area at which
higher than the strike price. This calculation does not include before the total position becomes a loss. falling prices are ex pected to stop or meet increased buying
margin and is not annualized. activity. This analysis is based on previous price behavior of the
Downside Pr otec tion (%) stock.
Assignment This percent considers the premium a seller would receive from
Notification by that an owner of an option has ex ercised his or her the sale of an option to be profit, but does not consider profit or Str ategy
rights to buy or sell the underlying stock. The buyer of an option loss on the stock. This percent assumes the stock is not The strategy refers to the choice of options methods deployed to
ex ercises his right and the seller of the option is assigned on the assigned. It represents the down side protection based on the sold profit on a stock and may be selling a covered call; selling a
option. This calculation does not include margin and is not option premium alone. This calculation does not include margin diagonal spread or holding the stock.
annualized. and is not annualized.
Time Value
Bid/Ask Spr ead Expir ation Date Option premium is made up of either time value, intrinsic value or
This is the difference in price between on options bid and ask The date on which an option and the right to ex ercise it or have it both. From its creation date to its ex piration date an options time
price. Options have wider bid-ask spreads than stocks do. assigned, cease to ex ist. value decays away and any value left is intrinsic value which
rises or falls with the price of the stock. If XZY stock is at $51.00
Br eak Even Expir ation Month and the April 50 call is trading at 2.50. The option has 1.00 (51.00-
The stock price at which any option strategy or combination stock The month during which the ex piration date occurs. 50.00) of intrinsic value and 1.50 (2.50-1.00) of time value.
and option strategy has a zero loss and zero gain.
Hor izontal Spr ead Tr ade Dur ation (Days)
Buy-Side An option strategy which generally involves the purchase of a This is the number of days a trade is active. It is the total number
Many trades have multiple parts to a transaction; in a covered call farther-term option (call or put) and the writing of an equal number of days from the initial opening transaction until ex piration day.
you buy may buy the stock and then sell the option. The buy side of nearer-term options of the same type and strike price. Ex ample:
indicates what stock or options you are buying in the transaction. buying 1 XYZ May 60 call (far-term portion of the spread) and Volatility
writing 1 XYZ March 60 call. See also diagonal spread. This is a rating of the stock's price volatility over the past year.
Call Ask Pr ic e Volatility is the propensity of a security to swing up and down in
The price a seller offers to sell a call option. This is the most an Intr insic Value price.
investor should pay for the bought option. Option premium is made up of either time value, intrinsic value or
Call Month both. The intrinsic value is based on how deep in the money the
The month during which the call option ex pires. stock is priced. For a call it is how far above the strike price the
stock price is located.
Call Str ike Pr ic e
The price at which the owner of an option can purchase (call) or In-The-Money Per c ent (%)
sell (put) the underlying stock. Used interchangeably with striking This phrase describes where the underlying stock price falls
price, strike, or ex ercise price. relative to the option strike price. For covered and naked call
options, it is when the stock price is above the strike price of the
Call Symbol option. For covered and naked put options, it is when the price of
An option symbol is comprised of three parts. The first one to three the stock is lower than the strike price of the option.
letters are the root symbol for the option. The second to last letter
stands for the ex piration month of the contract. The last letter in Key Metr ic s
the symbol represents the strike price of the contract. The key Metrics area of the report shows important option metrics
Corresponding Put and Call symbols for the same strike price will about the transaction including thing like the net debit, downside
have the same last letter in their symbols. While option symbols protection and risk rating.
are standardized; computer web sites are not. Some sites require LEAPS
the entry of a period "." in front of an option symbol, while others - An acronym that stands for Long-term Equity Anticipation
like Yahoo- require a period and the letter x ".x " at the end of it. If Securities. About 10% of the optionable stocks have LEAPs
going to a new site pull up an option chain to see their method of available, they are traded under different root symbols than the
entering options. normal option series and only ex pire in January of the nex t two
Cover ed Call Risk Ranking years. Once the March series options are the current month, the
A proprietary risk ranking for covered call strategies that ranks nex t January LEAPs change symbols to the normal root symbols
covered call trades from 1 Key (High Relative Risk) to 5 Keys and LEAPs are generated for three Januarys ahead in time.
(Lowest Relative Risk.)

©2024 Argus Research Company ARGUS Option Report

Amazon.com, Inc.
(NASDAQ: AMZN)
Report Date: July 17, 2024

Neither Argus nor any affiliate is a member of the FINRA or the

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1 Key - Highest Relative Risk
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