Amazon Goes to Hollywood on MGM Buyout Rumors

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

Deputy Editor
May 18, 2021 at 9:20 AM
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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. 

 

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