Your Best Shot at Making Double-Digits on Stock Isn't Today Inc. (Nasdaq: AMZN) is preparing to announce its quarterly earnings this afternoon after the close, and plenty of traders are expecting big things.

I think the real "smart money" should be avoiding the announcement, and I'll show you why.

Don't get me wrong - there's no question this competition- and market-crushing company is still one of the absolute best stocks for buy-and-hold investors to own for long-term growth, and in a minute, I'm going to show you how to juice those long-term profits.

But the folks who want to make some big, fast gains on these shares should hang back until the real high-profit fireworks start.

It won't be long...

Strong Earnings Expected, but... There's a Catch is expected to announce earnings of $1.39 per share on revenue of $37.18 billion. The results would represent a 22% growth rate in the company's top line, which would be the third quarter in a row of 22% growth.

Not bad by any stretch.

The thing is, this growth has generally failed to rally the stock immediately after earnings in the past. That means that you should be sitting on the sidelines waiting for an opportunity to buy this stock on the next dip.

Looking at the last three years, has beat analyst EPS estimates 50% of the time. Contrary to what most casual investors would think, this is actually below par for the "average" S&P 500 stock.

Interestingly, average performance after an EPS beat averages 10%, while the average one-week performance after an earnings miss is 8.3%.

Think about that for a second. You always want your potential upside to far outweigh the downside risk. In Amazon's case, there's less than a 2% difference - only 1.7%.

Not worth the risk!

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But wait, there's more data that tells us that the truly smart traders are waiting to buy

Since the beginning of July, Amazon shares have surged more than 8%, while the S&P 500 has gone up about 2%.

That's good news for traders already holding Amazon, of course, but like I said, there's a catch...

Early Bandwagon Buyers and Traders Could Get Burned

Stocks like often see a lot of bandwagon buyers pile into the stock ahead of their earnings announcements. This is the unmistakable signature of a "buy-the-rumor rally."

The downside, which almost always happens unless the company blows earnings expectations out of the water, is that the stock is now likely to see a "sell-the-news correction" almost immediately after Amazon's earnings hit the Street.

That's by no means bad news, though.

You see, according to our historical lookback, three of the last four Amazon buy-the-rumor rallies were reversed almost immediately after the company reported, resulting in a classic buy-the-dip opportunity.

What could be better than buying the stock at a discount after you've seen positive results? Why would you buy before?

Here's the kicker: Amazon's shares just hit a short-term overbought reading of their relative strength index (RSI), indicating that the recent piling-in in the stock has stretched the rally too far. And that sets us up beautifully for a short-term technical correction - the dip where you want to buy.

how to profit on stock

So, what do we see from here?

For those nimble traders, we would be selling positions in Amazon ahead of the Thursday afternoon results and preparing to go long the stock three to five days after the results hit - early in the week of Aug. 31 - in order to ride the stock back up to its current highs (and, of course, beyond).

In my Seismic Profits Alert research service yesterday, we opened a Quest Diagnostics Inc. (NYSE: DGX) trade after the stock dropped more than 3% in an "earnings aftershock" after a great earnings report and positive forward guidance.

In's case, I like buying the AMZN Sept. 15, 2017, $1,000 calls (AMZN170915C01000000) for a price of $70.00 or better per contract.

Those investors that would rather take a buy-and-hold approach with Amazon on the likely sell-the-news correction might choose to buy a long-term equity anticipation security (LEAP) option on the stock using the AMZN Jan. 19, 2018, $1,300 calls (AMZN180119C01300000) at a price of $8.00 or better.

The gains you'll likely see when you exercise either or both of these options will look mighty nice right alongside the good old-fashioned share appreciation.

Chris Johnson's Seismic Profits Alert is one of our newest VIP trading research services, with 22 double- and triple-digit winners since early April. This is a fast-moving service, but the market-beating potential of the gains is extraordinary. To learn how to get Seismic Profits Alert for yourself, click here.

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