Amazon's Next Billion-Dollar Buyout

Options trading and analysts alike are optimistic on AMZN stock

by Emma Duncan

Published on Feb 28, 2018 at 9:31 AM
Updated on Jun 24, 2020 at 10:16 AM

E-commerce powerhouse Amazon.com, Inc. (NASDAQ:AMZN) is adding yet another company to its list of billion-dollar buyouts. Late Tuesday, news broke that AMZN bought Ring, a smart doorbell maker, for upwards of $1 billion.

Although Amazon did not disclose the terms of the deal, it's expected to eclipse the $1.2 billion cost of Zappos to become the retailer's second-biggest acquisition after last year's $13.7 billion Whole Foods takeover. The Ring purchase is likely intended to enhance Amazon's new initiative to deliver packages inside Prime members' homes. In response, AMZN is up 0.5% at $1,519.42 out of the gate.

From a broader perspective, Amazon stock has had a great year, picking up 78% over the past 12 months. The equity has enjoyed the support of its 20-day and 50-day moving averages since its late-October bull gap. What's more, the FAANG stock touched a fresh record high of $1,526.78 during yesterday's trading.

In the options pits, traders have been leaning towards the bulls' camp, with Amazon stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 1.13 ranking in the 71st annual percentile. This suggests calls have been bought to open over puts at a faster-than-usual clip during the past two weeks.

What's more, AMZN's Schaeffer's put/call open interest ratio (SOIR) of 0.90 ranks in just the sixth percentile of its annual range. This indicates that short-term speculators have rarely been more call-skewed toward the stock during the past 52 weeks.

Unsurprisingly, the retail powerhouse sports heavy optimism from analysts following the stock. Of the overall 38, no fewer than 34 carry "buy" or "strong buy" recommendations. 


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