Amazon.com (AMZN) lower after online sales report

Amazon.com Inc. (NASDAQ: AMZN) stock is trading lower today on news that internet retail sales are growing at the slowest pace on record. According to a report released yesterday by comScore, Inc., November and December sales may rise only 20 percent, a record low and well below last year's pace of 26 percent. Consumers are putting off spending to offset higher food and energy costs while hoping for year-end bargains, according to the report. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMZN.

After hitting a one-year low of $36.30 in January, the stock hit a one-year high of $101.09 in October. This morning, AMZN opened at $90.77. So far today the stock has hit a low of $90.25 and a high of $91.22. As of 10:35, AMZN is trading at $90.54, down $1.86 (-2.0%). The chart for AMZN looks neutral and improving, 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 a January bear-call credit spread above the $110 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in 5 weeks as long as AMZN is below $110 at January expiration. Amazon would have to rise by more than 21% before we would start to lose money.

AMZN has never been above $110 and shown resistance around $95 recently. This trade could be risky if the holiday season turns out to be a strong one, but even if that happens, this position could be protected by resistance the stock might find around $101, where it topped out in October.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in AMZN.