Amazon.com, Inc. (AMZN) Echo Release Has Option Bulls Biting

Amazon.com, Inc. (NASDAQ:AMZN) weekly calls are hot, following news of Echo's wide release

Jun 23, 2015 at 1:04 PM
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You no longer need an invitation to purchase Amazon.com, Inc.'s (NASDAQ:AMZN) Echo. The company's smart-home/speaker device was previously available to a limited group during its beta release, but can now be bought by anyone for $179.99. The news has helped AMZN to a 1.5% lead to trade at $442.73, but option traders think there are more gains to be had through week's end.

Specifically, the weekly 6/26 450-strike call is AMZN's most active option today, where it appears new positions are being purchased for a volume-weighted average price (VWAP) of $1.48. Based on this average entry price, today's call buyers are hoping the stock powers through at $451.48 (strike plus VWAP) by this Friday's close -- when the weekly series expires. This breakeven mark is within a chip-shot of AMZN's earnings-induced all-time high of $452.65, tagged on April 24.

More broadly speaking, option traders have been initiating long puts over calls at a faster-than-usual clip in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMZN's 50-day put/call volume ratio of 0.85 ranks in the 70th annual percentile.

Echoing this is the security's Schaeffer's put/call open interest ratio (SOIR) of 1.16. which sits higher than 75% of similar readings taken in the past year. Simply stated, short-term speculators are more put-skewed than usual toward AMZN.

Drilling down on the weekly 6/26 series, peak put open interest is found at the 425 strike, where roughly 1,650 contracts are currently in residence. Given the out-of-the-money status of these puts, it's possible some of those purchasing the options could be shareholders protecting paper profits against a pullback.

In fact, Amazon.com, Inc. (NASDAQ:AMZN) has been a standout on the charts this year -- up nearly 43%. The stock could be poised to extend its trek into annual-high territory, as well, should option bears -- or analysts -- begin to capitulate to this positive price action.

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