Stocks quoted in this article:
Amazon.com, Inc. (NASDAQ:AMZN) puts are trading at a more rapid rate than calls this afternoon. By the numbers, 23,000 puts are on the tape, versus 18,000 calls. Weekly options are especially in vogue, as nine of the 10 most active options expire at this Friday's closing bell.
Diving into the details, AMZN's weekly 5/2 305-strike put has garnered the most attention today. Nearly 3,900 contracts are on the tape here -- outstripping open interest -- and the majority have traded off the ask. Considered together, it's safe to assume a portion of the weekly puts have been bought to open.
While AMZN shares have risen 0.4% today to trade at $301.67, the aforementioned options remain in the money. Nevertheless, in order for the put buyers to profit, they need the stock to descend below $299.09 -- strike less the volume-weighted average price of $5.91 -- by the closing bell this Friday, when the weekly options expire. If, instead, Amazon rallies back above $305 this week, the traders will be at risk of forfeiting the entire premium paid at initiation.
Taking a step back, today's penchant for put buying is far from unusual. In fact, AMZN's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio registers at 1.02 -- in the bearishly skewed 76th annual percentile.
It's no wonder, either. Amazon.com, Inc. (NASDAQ:AMZN) has had a rough 2014, shedding more than 24% -- thanks in part to an earnings-related bear gap late last week. In fact, the shares are in danger of finishing the week below their 80-week moving average for the first time since April 2012.