To The Moon

We saw Amazon (AMZN) showing a dip in recent trading while Nvidia seek to make an upside move, as I hold both $NVIDIA(NVDA)$ and $Amazon.com(AMZN)$, I might consider to buy the dip at the same time, play option to take advantage of any potential upside. as the market often presents contrasting movements between major stocks like Amazon (AMZN) and Nvidia (NVDA).

For Amazon (AMZN), the recent dip is viewed by some analysts as a potential buying opportunity, especially given its accelerating cloud (AWS) and AI momentum. For Nvidia (NVDA), analysts are also widely bullish, with a recent pullback being highlighted as an enticing buy-the-dip target ahead of expected strong earnings.

In this article, I would like to share the breakdown of how you could approach the "buy the dip" strategy for AMZN using options, as well as general considerations for both stocks:

Trading Amazon (AMZN) on a Dip Using Options

Options can be a strategic way to buy a stock on a dip, often allowing you to enter at a lower effective price or generate income while waiting.

1. The Conservative "Buy the Dip" Strategy: Cash-Secured Put

This is often cited as a more conservative way to use options to buy a stock you like at a lower price.

The Goal: To acquire AMZN shares at a price lower than the current market price, or to collect premium income if the price doesn't drop enough.

The Action: Sell (Write) an out-of-the-money (OTM) Put option.

You choose a strike price (e.g., $220 if the stock is at $235) at which you'd be happy to buy the shares.

You collect a premium (cash) upfront for taking on the obligation to buy 100 shares per contract at that strike price if the stock is below it at expiration.

The Outcome:

• If AMZN's price stays above your strike: The option expires worthless. You keep the entire premium as profit and don't buy the stock.

• If AMZN's price drops below your strike: You are "assigned" the shares, meaning you are required to buy them at the strike price. Your effective purchase price is the strike price minus the premium you received, which is a discount to the current market price when you initiated the trade.

Note: This strategy requires you to have enough cash reserved in your account to cover the purchase of 100 shares per contract (i.e., cash-secured).

2. The Aggressive "Buy the Dip" Strategy: Long Call Option

If you believe the dip is temporary and the stock will move sharply higher soon, a Long Call can offer high leverage.

• The Goal: To profit from a sharp upside move in AMZN.

• The Action: Buy (Go Long) a Call option with a strike price slightly OTM and an expiration date that gives the stock time to rally.

• The Outcome: If the stock rises significantly above the strike price plus the premium you paid, you can sell the option for a profit, or exercise it to buy the stock at the strike price.

• The Risk: Your maximum loss is limited to the premium paid, but options can expire worthless quickly if the expected upside move doesn't materialize.

Buying the Dip for Both Nvidia (NVDA) and Amazon (AMZN) Stocks

Important Considerations

• Risk Management: Options trading is complex and involves significant risk, including the potential loss of your entire investment. Make sure you fully understand the mechanics and risks of any option strategy before placing a trade.

• Timeline: "Buying the dip" works best for stocks you have a high conviction in for the long term. Both AMZN and NVDA have powerful underlying long-term themes (Cloud/AI) that support this view.

• Liquidity: AMZN and NVDA have very liquid options, which is beneficial for traders.

In the next section, we would like to examine the technical levels before executing a "buy the dip" strategy.

Based on recent technical analysis (as of early December 2025), here are the key support and resistance zones for Amazon (AMZN) and Nvidia (NVDA). These levels help define the risk/reward for your trades:

Amazon (AMZN) Technical Levels

The analysis suggests AMZN is currently in a correction or consolidation phase, having pulled back from its recent high. The $232-$234 zone is critical for the current short-term trend.

Nvidia (NVDA) Technical Levels

NVDA recently experienced a significant drop from its highs, and the technical picture is generally interpreted as a pullback within a broader bullish trend. The $175 - $183 range is the current battleground.

Here Is How We Can Do "Buy the Dip" Strategy

AMZN: The most favorable risk/reward setup for buying the dip seems to be in the $223 - $229 zone, as a move below would be a strong bearish sign.

NVDA: Buying in the $177 - zone seems like an immediate opportunity, with as a critical line in the sand.

Summary

The contrasting price action between Amazon (AMZN) and Nvidia (NVDA) creates specific "buy the dip" opportunities, supported by strong long-term fundamentals.

AMZN's recent dip, following a rally to new highs, is viewed by many analysts as a potential discount, with a consensus "Strong Buy" rating and high price targets (e.g., $305). The pullback is seen as a short-term market cooldown, not a reflection of its accelerating AWS cloud momentum and aggressive AI push (like its Trainium chip).

NVDA is also widely considered a "buy the dip" target, despite market volatility. The stock is the undisputed leader in AI chips, and projections for the massive AI infrastructure build-out ($4 trillion by 2030) suggest the growth story is only in the early innings. Its current pullback (often near the $177-$180 technical range) is seen as a healthy consolidation before a resumption of the uptrend.

Options Strategy for AMZN Dip: Trading the AMZN dip using options is a common strategy. The Cash-Secured Put is a conservative approach:

Action: Sell an out-of-the-money (OTM) Put option at a strike price where you're comfortable buying AMZN shares.

Outcome: You collect premium income. If the stock drops to your strike, you buy the shares at a discounted, pre-determined price.

This strategy allows you to either acquire the stock cheaper or profit from the premium if the dip doesn't reach your target. Both stocks benefit from powerful, multi-year AI and cloud trends, making the dips attractive for long-term position building.

Appreciate if you could share your thoughts in the comment section whether you think buying the dip for NVDA and AMZN would be a good choice now.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.