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Eleventh-Hour Bulls Flock Toward Amazon.com, Inc. (AMZN)

AMZN sees a surge in front-month call volume

by 11/14/2013 2:26 PM
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Option Brief: Shares of Amazon.com, Inc. (NASDAQ:AMZN) are 3% higher this afternoon to perch at $367.13, after the company announced that consumers can now customize their Kindle accessories. In the options pits, AMZN call volume is running at accelerated levels today, as roughly 37,000 contracts have switched hands thus far. This is a 49% mark-up over the security's expected intraday call volume, and 11,000 more than the number of puts exchanged.

Snagging the lion's share of the attention is the soon-to-expire November 365 call, which has seen north of 6,000 contracts cross the tape -- a large portion of them at the ask price, implying they were bought. Meanwhile, volume at this strike has exceeded current open interest levels, and implied volatility has ticked higher, pointing to the creation of new long positions. This theory is also supported by data from the International Securities Exchange (ISE).

By purchasing these in-the-money calls to open, the traders are hoping the stock will continue its ascent past the strike price by tomorrow's close, when front-month options expire. Meanwhile, the security's Schaeffer's Volatility Index (SVI) of 25% ranks lower than all but 11% of comparable readings collected during the past year, meaning AMZN's short-term options are relatively cheap right now.

Amazon.com, Inc. (NASDAQ:AMZN) has been in the news a couple of other times this week, as well. The Internet marketplace said on Monday that it has inked a deal with the United States Postal Service that will allow for Sunday deliveries. In addition, the company announced yesterday the launch of an Australian Kindle ebook store.


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