It could be the best chance this year to buy Amazon, said TradingAnalysis.com founder Todd Gordon
The tech giant is sitting in a correction, down more than 10 percent from its recent high on Sept. 4, but Gordon says there's a key technical level that has him betting on an Amazon bounce back.
"Amazon has pulled back into support with this overall market volatility, but I see it as a buying opportunity," he said Tuesday on CNBC's "Trading Nation."
According to Gordon, Amazon is looking oversold. On a year-to-date chart of the stock, he said that Amazon has pulled back to an uptrend support line that had been in place since February. And given that Gordon believes the bottom is in for tech and consumer discretionary stocks, which have fallen 3 percent and 4 percent this month respectively, he sees Amazon bouncing from that support line.
Amazon is expected to report earnings at the end of the month, and Gordon is using that date and targets levels around the $1,860 to $1,870 area.
Gordon is selling the October 26 weekly 1,880-strike put and buying the October 26 weekly 1,870-strike put for a credit of about $4.50, or $450 total. This means that if Amazon closes above $1,880 on Oct. 26 expiration, then Gordon would make the $450 credit on the trade. But if Amazon closes below $1,870, essentially falling beneath the support line he points out, then Gordon could lose up to $550.
On Wednesday, Amazon was trading around $1,855, and despite this month's plunge the stock is still up more than 58 percent this year.