Amazon.com Inc. (NASDAQ: AMZN) opened at $71.78. So far today the stock has hit a low of $70.85 and a high of $72.67. As of 11:00 this morning, AMZN is trading at $71.30, down $0.33 (-0.5%).

The stock began a sharp climb in mid-spring this year, reaching a one-year high of $75.35 earlier this month before meeting resistance. The stock is shaky this morning with tomorrow's earnings release on the horizon, and reports of the final tally of Harry Potter pre-orders are not helping matters. The seventh and final book in the series broke Amazon's previous pre-order record (set by the sixth book) of 1.5 million copies, with pre-orders reaching 2.2 million copies as of midnight July 20. However, it looks like investors and analysts were looking for a bit more from the boy wizard. Technical indicators for AMZN are bullish but deteriorating, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $85 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make an 8.7% return in just one month as long as AMZN is below $85 at August expiration. AMZN would have to rise by 19% before we would start to lose money.

AMZN has not been above $75.35 at all in the past year and has shown resistance around $73.50 recently. This trade could be risky if the company's earnings are a positive surprise, but after a big gain like AMZN had in April, it would be tough for the stock to rise by another 19% in the next month.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AMZN.

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