Amazon.com, Inc. (AMZN) Option Sellers Set a Short-Term Top

Amazon.com, Inc. is seeing call-selling activity today

Digital Content Group

Dec 3, 2014 at 1:37 PM

AMZN

Amazon.com, Inc. (NASDAQ:AMZN) is sitting 3% lower this afternoon at $316.50, bringing its year-to-date deficit beyond 20%. Option players have taken notice, with the contracts trading at almost twice their typical intraday rate. What's more, the stock's 30-day at-the-money implied volatility has spiked 7% to 27.1%, signaling elevated demand for short-term strikes.

Drilling into the data, the weekly 12/5 320- and 325-strike calls are the most sought-after AMZN options. A solid portion of the volume at both strikes has crossed at the bid price, and volume tops open interest, suggesting possible sell-to-open activity. This theory is partially confirmed, thanks to data from the International Securities Exchange (ISE).

Traders writing to open these out-of-the-money calls are banking on limited upside for Amazon.com, Inc. (NASDAQ:AMZN) through the end of the week, when the series expires. Specifically, the sellers expect the shares to churn below the respective strike prices during the next couple of days -- allowing the contracts to expire worthless, and the traders to secure the initial premium received as their maximum potential profit.

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