Amazon.com, Inc. (AMZN) Call Options Hot Ahead of Prime Day

Amazon.com, Inc. (NASDAQ:AMZN) is trading at all-time highs ahead of its annual Prime Day

by Josh Selway

Published on Jul 11, 2016 at 11:49 AM
Updated on Jun 24, 2020 at 10:16 AM

Wall Street's booming this morning, with the S&P 500 Index (SPX) touching an all-time intraday high. Among the stocks enjoying the broad-market tailwinds is e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN), which is up 1.2% at $755.00, hitting yet another all-time earlier at $755.55. This price action comes ahead of tomorrow's highly anticipated Prime Day, which has prompted swift action from sector rivals -- setting the stage for another Amazon-Wal-Mart Stores, Inc. (NYSE:WMT) face-off. Amid the buzz, options traders continue to target AMZN call options. 

Taking a quick step back, bullish option traders have had their eyes set on AMZN for weeks. It's no wonder, considering the shares have been essentially unstoppable since their year-to-date low of $474 back in February. For instance, call buying has outpaced put buying during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Plus, AMZN's Schaeffer's put/call open interest ratio (SOIR) of 1.06 ranks in the 33rd annual percentile -- indicating short-term options traders are less put-skewed than normal. 

Looking more closely, the July 750 call saw the largest increase in open interest over the past two weeks of all options that haven't yet expired. Data from the major options exchanges shows an almost dead-even split of buy- and sell-to-open activity at the strike. For those buying the calls, their goal was for AMZN to top the strike by this Friday's close, when the options expire, while the sellers were hoping the round-number level acted as resistance. 

With AMZN calls trading at 1.6 times the normal midday pace, the July 770 call is now the most popular. However, many of the contracts traded at this strike crossed at the bid price, hinting at selling activity -- possibly bears betting on the $770 level to serve as a short-term ceiling. Outside of this, buy-to-open activity seems likely at the July 755 call, as traders take advantage of a rather opportune time to buy AMZN options

Rounding out the sentiment picture on Amazon.com, Inc. (NASDAQ:AMZN), it's unsurprising to see a bullish bias today. For one, short interest has been on the decline, falling by 16.4% in the last two reporting periods. What's more, analysts remain fully committed to AMZN stock, as 28 of 30 recommend buying it, and none rate it a "sell." 

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