Amazon Stock Named Cowen's Best Idea For 2019

Cowen likes the potential of Amazon's Prime and cloud businesses

Managing Editor
Dec 11, 2018 at 12:04 PM
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The struggles of Amazon.com, Inc. (NASDAQ:AMZN) and its FAANG peers were well-documented amid the broad market sell-off. Today, though, AMZN is up 0.9% to trade at $1,654, after Cowen named the stock its best idea for 2019. More specifically, the brokerage firm waxed optimistic about the company's Prime and Amazon Web Services businesses, citing the former as the driver behind the long-term success of the company's retail business. 

As alluded to earlier, Amazon.com stock was not spared from the October bloodshed on Wall Street, shedding nearly 17% this quarter in total. However, the damage was contained late last month by the shares' 320-day moving average. AMZN has bounced since then, breaking out of a trendline of lower lows that started after its Sept. 4 record high of $2,050.50.

Daily Stock Chart AMZN

In the options pits, calls are still the preferred mode of action. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows AMZN with a 10-day call/put volume ratio of 1.25, which registers in the elevated 75th percentile of its annual range. This points to a healthier-than-usual appetite for bullish bets lately. Digging deeper, the weekly 12/14 1,700-strike call saw the largest increase in open interest during this time frame among contracts yet to expire, although it's unclear if these options were bought or sold. 

Whatever the motive, Amazon stock has been a strong target for premium buyers over the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 87 (out of 100). This shows a tendency for the stock to make bigger-than-expected moves over the past year relative to options traders' expectations.

 

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