Holiday Dominance Inspires, Inc. (AMZN) Call Buyers, Inc. (AMZN) crushed the competition when it came to holiday sales

Dec 27, 2016 at 10:52 AM
facebook X logo linkedin, Inc. (NASDAQ:AMZN) has been a dominant force this holiday season, grabbing nearly 37% of total online market share from Nov. 1 through Dec. 16, according to Slice Intelligence. What's more, sales of Amazon Echo and Echo Dot were up nine times year-over-year, and are on backorder until January. This may explain why the stock's call options have been catching fire of late.

Adding to the buzz, the internet retailer is expanding its reach, with Wedbush noting AMZN has "found several ways to compete" with Netflix, Inc. (NASDAQ:NFLX). "We think that Amazon's heightened focus on content spending, particularly for Originals, is a shot across Netflix's bow, as is its recent international expansion," one analyst explained. Amid the hullabaloo, AMZN stock has advanced 1.4% to $771.10, bringing its 2016 lead a hair north of 14%.

There's plenty more optimism across Wall Street, as well. Twenty-seven of 30 analysts rate Amazon a "buy" or better, while call buying has been transpiring at a feverish pace. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.24 calls for every put -- a ratio that ranks in the high 84th annual percentile.

It's more of the same this morning. Based on Trade-Alert, buy-to-open activity is detected at the weekly 12/30 770- and 780-strike calls, which are AMZN's two most active options at the moment. In short, these near-term bettors are anticipating end-of-week gains for the e-tail stock.

While options traders have been purchasing calls, short selling has also picked up. In the last two reporting periods, short interest on, Inc. (NASDAQ:AMZN) shot 25.3% higher. Therefore, it's possible some of these shorts may have purchased calls to protect their bearish stock positions. That said, taken as a whole, short interest still represents less than 2% of AMZN's float, suggesting bears are relatively rare overall.

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