Most Active Options: Amazon.com, Inc. and Alibaba Group Holding Limited

Option players remain bullish toward Amazon.com, Inc. and Alibaba Group Holding Ltd

Jan 5, 2015 at 12:50 PM
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The 20 stocks listed in the table below are the names that have attracted the highest options volume during the past 10 trading days. Those highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Among the stocks garnering attention lately are e-commerce concern Amazon.com, Inc. (NASDAQ:AMZN) and Chinese rival Alibaba Group Holding Ltd (NYSE:BABA), which have been popular among call buyers of late.

Most Active Options Table

On the charts, both stocks have both lagged the broader S&P 500 Index (SPX) during the past month. Today, AMZN is down 1.5% at $303.86, even after the firm said Amazon sellers sold more than 2 billion items in 2014 -- a record. From a longer-term standpoint, AMZN spent 2014 making a series of lower highs, though the stock found a floor in the $290-$300 area. Containing the equity's rally attempts has been its formerly supportive 10-month moving average, which was last seen in the $317.50 vicinity.

Monthly Chart of AMZN since April 2012 with 10-Month Moving Average

While BABA was one of the hottest IPOs of 2014, the stock has cooled off since peaking at $120 in mid-November, down nearly 16%. Today, the security has shed 2.4% to flirt with $101.19, and is on pace for its lowest close since Oct. 31.

Daily Chart of BABA since Sept 19 IPO

Despite the stocks' struggles of late, AMZN and BABA have been popular among call buyers. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMZN's 10-day call/put volume ratio of 1.57 stands higher than 92% of all other readings from the past year. In other words, AMZN speculators have initiated bullish bets over bearish at a much faster-than-usual clip during the past two weeks.

While BABA hasn't been trading long enough for annual comparisons, the absolute numbers paint a pretty bullish picture. The security's 10-day ISE/CBOE/PHLX call/put volume ratio sits at 3.40, implying that traders have bought to open more than three BABA calls for every put over the last 10 sessions.

Analysts also remain devoted to both stocks. AMZN boasts 18 "buy" or better ratings, compared to 12 "holds" and not a single "sell." Likewise, the 22 brokerage firms covering BABA deem it worthy of a "buy" or better. Plus, the average 12-month price target for BABA is $120.42 -- in uncharted territory for the shares.

Should Amazon.com, Inc. (NASDAQ:AMZN) and Alibaba Group Holding Ltd (NYSE:BABA) extend their recent downtrends, the current sentiment backdrop could leave the stocks vulnerable to a bullish exodus. An unwinding of optimism in the options pits, or a wave of negative analyst notes, could exacerbate selling pressure on the online shopping concerns.

 

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