Trump Presidency Pounds Amazon.com, Inc., Facebook Inc

Will a Donald Trump presidency be a bad thing for Amazon.com, Inc. (NASDAQ:AMZN) and Facebook Inc (NASDAQ:FB)?

Alex Eppstein
Nov 10, 2016 at 12:00 PM
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Amazon.com, Inc. (NASDAQ:AMZN) and Facebook Inc (NASDAQ:FB) shares are getting trounced at midday, as tech stocks struggle in the wake of Donald Trump's win in the U.S. presidential race. According to various reports, the technical pressure springs from the perception that Trump is anti-Silicon Valley, as evidenced by the incoming commander-in-chief's ongoing spat with AMZN CEO Jeff Bezos. Meanwhile, as AMZN and FB struggle, their options pits have heated up.

Diving right in, AMZN is down 4.6% at $736.18, and has now surrendered 13% since its Oct. 6 record high of $847.21. However, the e-tail giant still sports a roughly 9% year-to-date lead, and could get a boost from its 160-day moving average -- a level of support being tested as we speak.

In options land, AMZN calls and puts are running near parity, with both trading at more than twice their normal intraday rates. The weekly 11/11 750-, 770- and 780-strike calls are the most active options so far. Based on International Securities Exchange (ISE) data, there's likely a mix of opening and closing activity at these deep out-of-the-money strikes.

Short-term options buyers could be getting a steal, too. Amazon.com, Inc. sports a Schaeffer's Volatility Index (SVI) of 26%, in the low 30th annual percentile -- suggesting modest volatility expectations are currently being priced in. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) of 83 indicates AMZN has tended to make bigger moves over the past year than the options market has anticipated.

Turning to FB, shares of the social network have lost 4% at $118.14. Nonetheless, the stock remains a long-term outperformer, tacking on nearly 13% in 2016, and recently touching a record $133.50 in late October. Whether FB moves up or down from here could depend on whether its 200-day moving average holds as support.

Amid Facebook's sharp move, its options are being exchanged at triple the expected intraday rate. It looks like short-term bulls are buying to open the weekly 11/11 121-strike call, hoping the stock can bounce back above $121 by tomorrow's close, when the series expires.

However, over the past few months at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have been buying to open puts over calls at a historically extreme clip. Specifically, Facebook Inc's 50-day put/call volume ratio of 0.66 registers in the 100th percentile of its annual range. It's possible some put buyers have been speculating on a pullback, while others may be FB shareholders protecting paper profits against the same.

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