Option Bulls Rally Around Amazon.com, Inc. (AMZN)

Amazon.com, Inc. (AMZN) calls are crossing at twice the average midday clip

by Andrea Kramer

Published on May 21, 2015 at 11:24 AM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Amazon.com, Inc. (NASDAQ:AMZN) are up 2.9% at $436.21, after the firm expanded one-hour delivery services for Prime members in Manhattan. Adding fuel to the fire, Morgan Stanley lifted its price target on AMZN to $520 from $450 -- in uncharted territory -- and reiterated its "overweight" endorsement. In the same optimistic vein, AMZN option traders are rolling the dice on even more upside for the e-tail giant. 

AMZN calls are changing hands at twice the average midday clip, and have nearly doubled puts thus far. Options expiring at tomorrow's close account for nine of the 10 most active contracts, with buy-to-open action spotted at the weekly 5/22 430-strike call.

By purchasing the calls at a volume-weighted average price (VWAP) of $4.20, the buyers' profit will increase the higher AMZN moves north of $434.20 (strike plus VWAP) by the end of this week. Delta on the call now sits at 0.83 -- roughly quadrupling from last night's 0.21, reflecting the growing odds of an in-the-money finish.

Thanks to today's rally, Amazon.com, Inc. (NASDAQ:AMZN) boasts a year-to-date gain of more than 40%.  However, the stock's upward momentum could run into a speed bump in the $440-$450 neighborhood -- home to the equity's late-April bull gap, and an area that stalled AMZN's rally attempt earlier this month. 

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