Amazon.com, Inc. (AMZN) Offers Prime Members, Option Buyers Big Deals

Amazon.com, Inc. (NASDAQ:AMZN) will offer Prime members 'more deals than Black Friday' when it celebrates its 20th anniversary

by Karee Venema

Published on Jul 6, 2015 at 1:48 PM
Updated on Jun 24, 2020 at 10:16 AM

It's Christmas in July -- at least, according to Amazon.com, Inc. (NASDAQ:AMZN). Specifically, Prime members will receive "more deals than Black Friday" next Wednesday when the company celebrates its 20th anniversary with its first ever Prime Day. Separately, a federal appeals court today reinstated a trademark lawsuit that had previously been brought against Amazon. At last check, the stock was off 0.7% at $434.88 amid a broad-market downturn, but still maintaining its 40% year-to-date gain -- and remains one to watch this month.

In spite of this impressive technical showing, put players have been active in the equity's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMZN's 50-day put/call volume ratio of 0.88 ranks in the 71st annual percentile.

Echoing this is AMZN's Schaeffer's put/call open interest ratio (SOIR) of 1.06, which sits higher than 65% of similar readings taken in the past year. Simply stated, short-term speculators are more put-heavy than usual toward the stock.

Given the stock's big run up the charts in 2015, it's possible some of the activity could be a result of shareholders protecting paper profits. Regardless, those purchasing AMZN's near-term options are currently able to do so at a relative bargain. In fact, the security's Schaeffer's Volatility Index (SVI) of 22% sits in the 9th percentile of its annual range, meaning premium on the equity's short-term options are pricing in low volatility expectations at the moment.

Meanwhile, this skepticism is seen outside of the options pits, as well. More than 46% of analysts covering the shares maintain a lukewarm "hold" recommendation. Plus, the average 12-month price target of $469.08 stands at an 8% premium to the stock's present price. Should Amazon.com, Inc. (NASDAQ:AMZN) resume its longer-term trend higher, an unwinding of pessimism both in and out of the options pits could translate into a fresh burst of buying power.

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