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
facebook twitter linkedin


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.
 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

SCHAEFFER'S JULY STOCKS REPORT AD
 


 


 
Special Offers from Schaeffer's Trading Partners