Bulls Keep Buying as Amazon.com, Inc. (AMZN) Outperforms

Amazon.com, Inc. (NASDAQ:AMZN) is one of a few retail stocks in the black today

by Josh Selway

Published on May 11, 2016 at 2:24 PM
Updated on Jun 24, 2020 at 10:16 AM

With seemingly every other retail stock reeling amid earnings-related sector headwinds, there's one familiar outperformer: Amazon.com, Inc. (NASDAQ:AMZN). The e-commerce stock hit another all-time high of $717.88 earlier, and was last seen up 1.8% at $715.41. What's more, today's pop has AMZN options traders betting on even more upside through week's end. 

More specifically, AMZN calls are trading at roughly twice the average intraday clip. The weekly 5/13 series, which expires on Friday, is immensely popular, accounting for the three most active AMZN options. Traders are targeting this series' 710-, 715-, 720-strike calls, likely opening long positions at each option. By doing so, they're betting on AMZN to extend its run into record-high territory through Friday's close. 

Despite AMZN's technical success, this is actually unusual behavior from its short-term options traders. The stock's Schaeffer's put/call open interest ratio (SOIR) comes in at 1.28, which tops 80% of all readings from the past year. In other words, Amazon.com speculators targeting options that expire within three months are much more put-skewed than normal

Either way, it's a prime time to bet with AMZN options, from a pricing standpoint. That is, the stock's Schaeffer's Volatility Index (SVI) of 24% sits in the low 13th annual percentile, meaning premium on near-term AMZN options are attractively priced at current levels, from a volatility perspective. 

A quick look outside the options arena shows, unsurprisingly, an overwhelming bullish tilt among analysts. Twenty-five of the 29 brokerage firms covering the stock say it's a "buy" or better, while none consider it a "sell." Moreover, AMZN was recently a recipient of a price target that caught all of Wall Street's attention

Taking a moment to quantify Amazon.com, Inc.'s (NASDAQ:AMZN) dazzling run up the charts, the shares have surged 66% in the past 12 months. Helping the stock today are comments from former Apple Inc. (NASDAQ:AAPL) CEO John Sculley, who told The Street he thought Amazon.com's cloud business -- Amazon Web Services -- was worth $100 billion by itself. Meanwhile, this positive price action had AMZN in overbought territory even before today's gains, according to the stock's 14-day Relative Strength Index (RSI) of 72, so the stock could ​technically​ be due for a short-term pullback. 

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