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The tide has turned among Amazon.com, Inc. (NASDAQ:AMZN) options speculators, who have recently abandoned a bearish put-buying campaign in favor of long call options. During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than 35,000 calls have been purchased to open, compared to slightly fewer than 27,000 puts.
This activity has resulted in a 10-day call/put volume ratio of 1.31. Not only is this a notable shift from the Aug. 1 reading of 0.87, but it is higher than 95% of all readings of this kind over the past 12 months. In essence, long calls have rarely been in greater demand in AMZN options pits.
Short-term options players are also scooping up calls, as evidenced by Amazon's Schaeffer's put/call open interest ratio (SOIR) of 1.05. While this reading indicates that calls and puts are near parity in the front three-months' series (in fact, puts have a slight advantage), it is also 2 percentage points shy of an annual low, meaning this trading contingent has hardly ever been as call-centric during the past year.
For option traders seeking a speculative play at a fair price, AMZN looks like a reasonable choice. Schaeffer's Volatility Index (SVI) of 24% is lower than 90% of the year's past readings, indicating that short-term options are relatively inexpensive currently.
The options crowd is not alone in its Amazon.com enthusiasm, however; analysts also continue to favor the stock. Twenty-five of the 34 analysts following the stock have named it a "buy" or better, and not one deems AMZN deserving of a "sell." Also, following some recent adjustments, the consensus 12-month price target of $331.22 hovers almost 15% north of the stock's current price at $288.82.
On the charts, AMZN has gained roughly 15.2% in 2013, narrowly lagging the broader S&P 500 Index (SPX). Amid the recent market pullback, the shares breached their 40-day moving average -- now perched overhead around the $295 mark -- for the first time since late May. Amazon.com, Inc. (NASDAQ:AMZN) is now trading above the $280-$285 area, which acted as resistance in June. A continued bounce from this support could be good news for recent call buyers, provided AMZN is able to power back north of its 40-day -- and beyond that, the $300 round-number level. Today, AMZN has inched up roughly 1.2%.