Amazon Stock Rises After Allocating Millions to Holiday Bonuses

The equity is up over 75% year-over-year

Digital Content Manager
Nov 27, 2020 at 10:27 AM
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The shares of Amazon.com, Inc. (NASDAQ:AMZN) are up 0.7% at $3,207.63 at last check, after the major e-tailer said it would spend more than $500 million on one-time bonuses for its front-line employees in the United States, who are working the holiday season during the coronavirus pandemic. Full-time worker will receive a $300 bonus, while those in part-time roles will get a $150 bonus, the company said in a blog post.

On the charts, the equity has been cooling off from a Sept. 2, all-time-high of $3,552.25, after notching records on a monthly basis since April. Over the past several weeks, the stock has been struggling with overhead pressure at the $3,200 mark, though the 120-day moving average remains as a consistent source of support. Year-over-year, AMZN is up 75.8%. 

Analysts are overwhelmingly optimistic toward Amazon stock, with all 32 in coverage sporting a "buy" or better rating. Meanwhile, the 12-month consensus target price of $3,812.78 is a whopping 19.1% premium to the security's current perch, which could leave AMZN exposed to price-target cuts. 

The options pits are far more pessimistic, with puts particularly popular. This is per the security's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 80% of readings from the past year. In simpler terms, puts are being picked up at a quicker-than-usual clip. 

This pessimism does not ring true today, however. In just the first half hour of trading, 42,000 calls have crossed the tape, which is twice the average intraday amount, and more than double the number of puts traded. Most popular is the expiring 11/27 3,250 strike-call, followed by the 3,200 strike-call in the same weekly series, with investors expecting more upside for Amazon stock by the end of the day.

It seems now is a great time to weigh in on Amazon stock with options. The security's Schaeffer's Volatility Index (SVI) of 31% sits in the relatively low 24th percentile of its annual range. In other words, AMZN sports attractively priced premiums at the moment. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) ranks high at 86 out of 100, meaning AMZN has tended to exceed these expectations during the past year -- a boon for options buyers.

 

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