Is Being Able to Hire A Plumber On Amazon Going to Drive Growth?

Post by:, Inc.(AMZN) has announced that it will be launching a new service, Amazon Home Services, that will allow customers to shop and purchase different professional services such as housekeeping, plumbing, handiwork, and other professional services. Initially there will be 700 different services offered via the new marketplace. As convenient as this new service may be for Amazon shoppers investors are still wondering if this will help spur the next leg of growth for the online giant.

AMZN stock has been somewhat stagnant since gapping higher on last earnings and the stock hasn’t made a new 52 week high since January of 2014. Investors are looking for the next phase of growth in AMZN but the company’s more recent investments in same day delivery services, brick and mortar locations, and other low margin operations have yet to show investors what they are looking for. Is this venture into a professional services marketplace the answer to the growth question?

AMZN faces competition in this space but the players that are already established are dwarfed by the size of AMZN so this could position Amazon well. If a trader thought that this new service will boost growth for Amazon how could they get long without deploying all of the capital needed to buy the stock?

AMZN is currently trading around $374 in a 52 week range of $284-$389.37. The stock gapped higher on earnings and is up just over 20% this year so a trader may want to use a stock replacement strategy to get long AMZN. Let’s see how that breaks down.

Trade: Buying the AMZN Jul 340 Calls for $44.00

Risk: $4400 per 1 lot
Reward: Unlimited
Breakeven: $384.00

This is a lot of premium but it lets a trader get long AMZN with a P&L profile very similar to the underlying stock without having to tie up as much margin.

Andrew Keene

Submit a Comment

Your email address will not be published. Required fields are marked *


Your ultimate source of knowledge about the markets.

Recent Posts



Join our VIP Notification Service and Be Among The First To Know About All The Latest Trade Ideas, Trading Tips, Highly Profit Potential Trades, and Market Predictions From Our Team of Expert Traders!
Join Text Messaging List
By providing your mobile phone number and clicking on the above button, you agree to receive automated promotional messages from us. By opting into our SMS Program, you agree to our Terms and Conditions and Privacy Policy  
You have to agree on terms in order to proceed to the subscription.


Get Our Free Daily Trading Videos

Delivered To your Inbox

By submitting your information you agree to our Terms of Service and our Privacy Policy