A New CEO Could Break this Stock Out of Its Stuck Range

There’s nothing wrong with a company trading in a range, moving up a little and down a little, but mostly unchanged over time. But investors who look for catalysts can likely find hints as to whether a company will break out of its range higher or lower.

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  • Right now, one range-bound stock is also one of the biggest out there.

    Shares of Amazon (AMZN) have been stuck in the low $3,000 range after a massive rally over the past few years. Now, one key catalyst has arrived for the stock’s next move.

    The company has a new CEO, Andy Jassy, who formerly built and ran the company’s value-generating Amazon Web Services (AWS) division.

    As with other big tech companies whose founding CEO has left, a new leader pursuing new ideas and making improvements can likely lead to some bigger changes that wouldn’t have happened before.

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  • Action to take: Shares are likely to break to the upside as the company starts to make some changes under new management. After nearly a year of trading sideways, there’s been strong consolidation that has prepped shares for a move higher. Anyone using Amazon products should consider owning shares, even if they can only afford one share (or a fraction of a share).

    While this catalyst may not result in a massive jump right away, traders may like the January 2022 $4,500 calls. That would require a big jump in shares for the trade to move in-the-money, but controlling 100 shares of Amazon is a pricey proposition. Last going for about $38.00, traders can likely see mid-double-digit gains on this trade if the stock breaks higher.

     

    Disclosure: The author of this article has a position in the company mentioned here, and may make further trades after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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