Amazon Goes to Hollywood on MGM Buyout Rumors

Option players have shifted in a bearish direction during Big Tech's recent selloff

Digital Content Manager
May 18, 2021 at 9:20 AM
facebook twitter linkedin


Reports came out last night that e-tail giant Amazon.com, Inc. (NASDAQ:AMZN) is in talks to buy MGM Holdings' (MGMB) film studio in a deal that could be worth up to $10 billion, though some sources say the deal will be worth anywhere from $7 to $9 billion. This would position AMZN firmly in the entertainment industry, but the firm has yet to comment on the speculation.

Nevertheless, AMZN is climbing the charts today, up 0.8% at $3,292.89, in an effort to recoup from the early May selloff that's devastated tech. This pullback looks to have found its footing near the $3,150 level, which served as pressure briefly in February and March. Should today's gains hold, the equity could be looking to string together its fourth-straight win, and year-over-year the security is still up over 35%. 

Last month's blowout earnings report brought in plenty of analyst bull notes, and the brokerage bunch has maintained this optimism, despite the pullback. Thirty-one analysts covering the stock call it a "strong buy," and four say "buy," with nary a "sell" or "hold" rating to be seen. Plus, the 12-month consensus price target of $4,258.98 is a 29.3% premium to last night's close. 

Option traders, on the other hand, are leaning a bit more bearish than usual. This is per AMZN's 10-day put/call volume ratio of 0.79 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Adding to this, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.88 stands higher than 73% of readings from the past year. This means short-term option players have been much more put-biased of late. 

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners