If you follow my writing here or elsewhere, you know that Amazon is one of my favorite stocks to follow, and for good reason. The stock has seen incredible growth over the past year after turning things around and addressing the concerns that were raised in 2014. Recently, the stock has been tanking. However, today Amazon is looking great. With such volatility, there's quite a bit of opportunity being created for binary options traders. Today, we'll talk about why Amazon fell recently, what we're currently seeing from the stock, what we can expect to see moving forward, and how binary options traders can earn from the trends.

Why Amazon Fell So Hard

Recently, Amazon has been spiraling downward in a big way. At the close of the day on January 28th, the stock was trading at $635.35 per share. Now the stock is trading under $500 per share. So, what caused the declines? Earnings are to blame! In the quarter, analysts expected to see earnings come in at $1.56 per share. Unfortunately, the company was only able to generate $1 per share in earnings. In terms of revenue, the company also missed expectations. In the fourth quarter, Amazon produced revenue in the amount of $35.75 billion. Unfortunately, this fell short of the $35.93 billion that analysts expected to see. As we know, there are few factors that have the ability to move the market like earnings, and with such negative earnings, it's expected that we would see declines.

What We're Seeing From Amazon Today

Although we've seen big losses on Amazon over the past two weeks or so, things seem to be reversing today. It seems as though Amazon has hit support. Currently (12:39), Amazon is trading at $496.96 per share after a gain of $14.89 per share or 3.09% so far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively mixed opinion of what we can expect to see from Amazon. In the short term, we're likely to see quite a bit more volatility as the poor earnings have led to uncertainty among investors. However, in the long term, I'm extremely excited with regard to the direction the company and its stock is likely to head. There are several reasons that I have such bullish expectations for Amazon in the long run. The most important of these include…

  • AWS – Amazon launched a cloud service a while ago that's known as Amazon Web Services. This cloud service has quickly grown to become one of the most popular online today, and that's leading to massive amounts of revenue. Considering the growth we've seen in the service, there's no reason to expect for it to shrink. So, I believe that it will continue to be a great revenue driver for Amazon.

  • Prime – Amazon prime is an incredible service, and I'll admit, I didn't see how it was profitable in the beginning. With a low annual fee, all I saw was losses on shipping costs. However, over the past year, we've received quite a bit of data with regard to the service and that opinion has changed. The losses on shipping are overshadowed by the massive amount of money that Prime members spend with the online retailer. So, this will lead to more gains.

  • Brick And Mortar Book Stores – Finally, Amazon recently announced that it is working to launch brick and mortar book stores. I believe that this is a big move because of the opportunities that it gives the company not only to sell books, but to sell its technology.

All in all, things are looking great in the long run for Amazon.

How Binary Options Can Trade The Trends

As mentioned above, Amazon is likely to see quite a bit more short term volatility. So, in the short term, traders should pay close attention to support and resistance trend lines. When the value of the stock nears support, purchase call options to ride the resulting trends upward. When the value of the stock nears resistance, purchase put options to ride the resulting trends downward. However, when the volatility fades, it's time to ride on call options as trends are likely to be upward!

What Do You Think?

Where do you think Amazon is headed moving forward and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]