Netflix Challenge Excites Amazon.com, Inc. (AMZN) Options Bulls

Amazon.com, Inc. (NASDAQ:AMZN) call options are trading at an accelerated rate after the company announced its new standalone video service

Apr 18, 2016 at 11:00 AM
facebook twitter linkedin


Amazon.com, Inc. (NASDAQ:AMZN) call options are trading above the average intraday pace this morning. The company is in the news after announcing a new standalone video service to compete with Netflix, Inc. (NASDAQ:NFLX). As such -- and ahead of Thursday's earnings report -- AMZN is up 1.5% at $635.50. 

AMZN's weekly 4/22 series accounts for nine of the 10 most popular strikes, with the 640-strike call taking the top spot. Buy-to-open activity has been detected here, meaning the buyers are betting on AMZN topping $640 -- territory not charted since early January -- by week's end, when the contracts expire. 

This call bias is unusual for short-term AMZN speculators. In fact, the stock's Schaeffer's put/call open interest ratio (SOIR) stands at an annual high of 1.42. Said differently, options traders targeting contracts with a lifespan of three months or less are more put-skewed than at any other point during the past 12 months. 

There's little pessimism outside the options pits, though. AMZN's short-interest ratio sits at a low 1.50, while 83% of covering brokerage firms recommend buying the stock, and none consider it a "sell." Moreover, AMZN's average 12-month price target stands at $732.78 -- a 15% premium to current levels and territory never before explored. 

Technically speaking, Amazon.com, Inc. (NASDAQ:AMZN) has been strong in recent weeks, amid a flurry of headlines. The stock has gained over 34% since its year-to-date low of $474 from early February, and has outperformed the broader S&P 500 Index (SPX) by nearly 12 percentage points in the past month.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners