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Option players have been amassing positions on Amazon.com, Inc. (NASDAQ:AMZN) of late, expressing confidence as the stock tries to climb back above round-number resistance. The stock has managed just one daily close north of $300 since Aug. 6, but is currently trading at $301.01, up 0.5% today. (Year-to-date, AMZN shares have tacked on almost 20%, narrowly outperforming the broader S&P 500 Index [SPX].)
The speculative crowd, meanwhile, has rarely had such a positive outlook. During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have purchased to open 32,518 Amazon.com calls, versus just 23,474 puts. The resulting 10-day call/put volume ratio of 1.39 is notably higher than the reading of 1.10 seen at the end of August, and is in fact at an annual peak. In other words, long calls have not been in greater demand at any point during the past year as they have over the last two weeks.
Panning back a bit, the 50-day call/put volume ratio of 1.15 is just 5 percentage points away from an annual high. Echoing this, Amazon's Schaeffer's put/call open interest ratio (SOIR) of 1.05 stands in the 4th annual percentile, shy of a 52-week nadir. Short-term option players, then, have rarely been as call-focused over the last 12 months.
Significant on the charts, the $300 area is also notable from an options perspective. This is the site of peak call open interest in the soon-to-be-front-month October series, with more than 4,200 contracts in residence. What's more, the large majority of these positions have been purchased to open, as option bulls wager on a solid break through this strike.
Meanwhile, short sellers have been hitting the exits in recent weeks; since early August, the number of shorted shares has dropped by nearly 17% and now represents less than 2% of the equity's float. It's unlikely, then, that much of the recent call-buying activity has been the result of short sellers looking to hedge their positions.
On the Street, analysts are largely supportive of AMZN shares, as well. Of the 33 firms following the stock, 24 have named it a "buy" or better. Not all are convinced, however. Nine brokers still think the stock deserves a tepid "hold" rating (including Wedbush, which initiated "neutral" coverage on the stock on Wednesday).
Even if Amazon.com, Inc. (NASDAQ:AMZN) remains stifled by the $300 mark in the short term, call buyers can rest assured that they are paying a fair price for their investment. The stock's Schaeffer's Volatility Index (SVI) of 21% is a chip shot away from its annual low of 20%. In other words, AMZN's short-term options are inexpensive at present, from a volatility perspective.
Off the charts, bookworms are eagerly anticipating next month's launch of Kindle MatchBook. The program allows Amazon customers to buy electronic versions of previously purchased print volumes for a discount price (no higher than $2.99).