Amazon Call Volume Boosted By Buffett

The Oracle of Omaha amassed a more than $900 million AMZN stake

Andrea Kramer
May 16, 2019 at 2:02 PM
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In a filing late yesterday, it was revealed that Warren Buffett's Berkshire Hathaway (BRKA) took a roughly $904 million stake in e-commerce titan Amazon.com, Inc. (NASDAQ:AMZN), confirming buzz earlier this month that the Oracle of Omaha was amassing a position in the FAANG stock. As such, AMZN shares are higher in afternoon trading, and call volume is running hotter than usual today.

Amazon stock was last seen 1.9% higher at $1,905.98. The equity is on pace to end back atop both its 10-day and 20-day moving averages for the first time since May 6, just after AMZN notched a year-to-date high of $1,964.40. The shares are also on pace for a third straight gain -- something that hasn't happened in roughly a month -- and have clawed their way into the black for the week, erasing Monday's trade-related bear gap.

AMZN stock chart May 16

At last look, the FAANG stock has seen roughly 107,000 call options cross the tape -- about 1.5 times its normal afternoon volume. Four of the five most active options are calls expiring tomorrow, in fact. In addition, it looks like bulls are buying to open the weekly 5/24 1,900-strike call; of the top 20 most popular Amazon options today, it's the only one that doesn't expire at the close tomorrow. By purchasing the calls to open, the buyers expect AMZN shares to extend their run north of $1,900 next week.

It's an opportune time to speculate on the security with near-term options. AMZN's Schaeffer's Volatility Index (SVI) of 23% registers in just the 17th percentile of its annual range. In other words, the stock's short-term options are pricing in relatively modest volatility expectations for the shares.

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