Amazon Tests $1,200 as Bearish Options Get a Cyber Monday Discount

AMZN put options have rarely been cheaper relative to calls

Managing Editor
Nov 28, 2017 at 10:13 AM
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U.S. stocks are trading higher on the heels of record-breaking Cyber Monday retail sales. Three stocks making moves today are sports bar and restaurant chain Buffalo Wild Wings (NASDAQ:BWLD), tech giant Amazon.com, Inc. (NASDAQ:AMZN), and medical device company Apollo Endosurgery Inc (NASDAQ:APEN). Here's a closer look at what's moving shares of BWLD, AMZN, and APEN.

Buffalo Wild Wings Stock Soars on Roark Buyout

Shares of Buffalo Wild Wings stock are up 6.4% at $155.75, after Arby's parent organization Roark Capital Group announced that it will acquire the restaurant chain for $2.9 billion including debt, or $157 per share. BWLD gapped higher on Nov. 14 on initial reports of the Roark bid, but today's news provided the final push to get the shares back into positive territory on a year-to-date basis.

As speculation simmered about a potential takeover, options traders scooped up calls. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows BWLD with a 10-day call/put volume ratio of 1.39, which ranks in the 70th percentile of its annual  range. This suggests calls were bought to open over puts at a faster-than-usual clip during the past two weeks.

All Eyes on Amazon After Record Cyber Monday Sales

Amazon stock opened strong this morning, following reports that Cyber Monday generated a record-breaking $6.59 billion in online sales. At last check, AMZN had pared its early gains to trade up 0.5% at $1,201.03, after briefly dipping below the closely watched $1,200 level.

Amid AMZN's rally into record-high territory, put options on the retail powerhouse have become remarkably cheap relative to their call counterparts. In Monday's session, the stock's 30-day implied volatility skew bottomed out at a new 52-week low of negative 3.7%, according to Trade-Alert.

APEN Gaps Higher on FDA Approval

Shares of APEN are soaring after the company's new endoscopic suturing tool, OverStitch Sx, received approval from the Food and Drug Administration (FDA) late Monday. At last check, APEN stock is up 56.4% at $6.35, and on pace to close above resistance at its 100-day moving average for the first time since April.

If today's rally is being driven by short-covering activity, it's not likely to last long. In response to the stock's lengthy decline -- down 66% year-to-date, through Monday's close -- many short sellers have already taken profits. Short interest fell by nearly 82% during the past two reporting periods, and now accounts for just 0.6% of APEN's float, or 0.3 times its average daily trading volume.

 

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