Options Traders Blast Amazon Stock After Earnings

Amazon issued a sunny Q3 forecast

Deputy Editor
Jul 29, 2022 at 11:08 AM
facebook twitter linkedin


Big Tech earnings took center stage before the market opened, and Amazon.com, Inc. (NASDAQ:AMZN) highlighted the batch, with its shares up 12.4% to trade at $137.42, at last glance. Though the company reported second-quarter losses of 20 cents per share, due mostly to a $3.9 billion loss on its Rivian (RIVN) investment, it's seeing tailwinds from better-than-expected revenue of $121.23 billion thanks to key segments such as Amazon Web Services and advertising. As a result, Amazon issued a sunny forecast for the third quarter. 

Options traders are already in a frenzy following the results. In the first half hour of trading, roughly 554,000 calls and 278,000 puts exchanged hands, which is five times the amount typical of this point in a given session. The weekly 7/29 135- and 140-strike calls are the most popular contracts, and new positions are opening at both. This indicates these traders see gains up to $140 for AMZN by the session's end.

A bull note barrage is further boosting sentiment, with no less than 14 price-target hikes rolling in. Cowen and Company stood out as the most optimistic, adjusting its price objective to $215 from $210. Meanwhile, Raymond James and Atlantic Equities cut their price targets to $164 and $160, respectively, and Benchmark finally adjusted its price target to $160 from $3,700 following Amazon's stock split.

Sentiment was already high coming into today, with 29 of 31 covering brokerages recommending a "buy" or better. What's more, the 12-month consensus price target of $172.71 was a 28.1% premium to last night's close.

Other members of the group formerly known as FAANG have weighed in with results recently, most notably Google parent Alphabet (GOOGL) and Apple (AAPL), but Amazon stock is experiencing arguably the best post-earnings reaction. Today's double-digit percentage pop back above the $136 level and 80-day moving average is significant, the sight of a late-April bear gap that dragged AMZN to two-year lows over the past few months. However, year-to-date the stock remains down 18.8%.

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Best stocks for October and worst stocks for October
 


 


 
Special Offers from Schaeffer's Trading Partners