We are in earnings season and last night, Amazon (NASDAQ:AMZN) made some significant news amid all the other madness that social media stocks are currently experiencing. AMZN delivered twice the profits that investors were expecting with an impressive beat. Historically, AMZN stock naysayers have always argued that the company delivers growth at the expense of terrible margins. This report put that notion to bed once and for all.

The flip side is that Amazon did miss on the top line but for one report it is not yet a concern. Longer-term, I still expect the company to deliver incredible growth as it has been doing for a decade.

In other words, the short thesis on AMZN in a rising stock market just got much weaker. And therein lies the opportunity.

Today’s trade delivers profits from proven support levels. I sell downside risk against levels that should hold through 2018 unless the stock market crashes.

At all-time high levels, I prefer to bet on support rather than chase upside potential. We still have a slew of headline threats from tariff wars with China and Europe, so my bet has to make room for non-AMZN stock headlines too.

Amazon stock has baffled experts for decades as management is able to manage profitability and grow like no other company on the planet. This is the ultimate startup.

Fundamentally it is not cheap but for as long as AMZN stock remains a growth stock, I only care about growth. The good part here is that AMZN also delivers profits when it wants. Otherwise, management spends what it needs to dominate new opportunities like AWS.

Technically, Amazon stock’s fast rise forms a steep rising wedge. This creates a measured move risk if it fails. But there are potential support levels around $1,600- and $1,700-per-share.

I have been a long time fan of AMZN stock. But now I have watch the top line miss wrinkle. If the growth slows in coming quarters, then the issue will be more serious.

So far, this is a hyper growth stock, but this top-line miss could be a sign of it slowing down. The good news is that this usually takes months to unfold.

So, for 2018, I am confident that Amazon support will hold through 2018.

Behind strong AWS performance, AMZN stock should hit $2,000-per-share soon. Also there is the new area to watch: Advertising. This is a small piece of the pie, but one that can deliver strong incremental bottom-line growth.

Nevertheless, my trade today doesn’t even need a rally to win. If the stock stays above my strike I realize my maximum gains.

How to Trade AMZN Stock

The trade: Sell the JAN 2019 $1,400 naked put and collect $14 to open risk. Here there is I a 90% theoretical chance of winning. But if the price falls below $1,386 then I’ll suffer losses.

Selling puts in a momentum stock like AMZN is daunting and requires a lot of margin for error. Traders could mitigate that risk by selling spreads instead.

The alternate trade: Sell the Jan 2019 $1410/$1400 bull put spread for a chance to yield 10% on risk.

Remember, investing in the equity markets is always risky, so don’t bet more than you can afford to lose.

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Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him as @racernic on twitter and stocktwits.

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