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Amazon.com, Inc.'s moves on and off the charts have attracted option players
The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is e-commerce concern Amazon.com, Inc. (NASDAQ:AMZN), which is soaring on the charts.
Amazon.com, Inc. shares were last seen 4.6% higher at $331.18, and on pace to end north of their 200-day moving average for the first time since late July. The company yesterday said it made peace with publishing group Hachette, and reached a deal for e-book and print sales in the U.S. In addition, AMZN issued a new Kindle update that allows family sharing, among other features.
In light of AMZN's ascent, the stock's short-term options are flying off the shelves faster than Frozen merch on Black Friday. Intraday volume is running at three times the typical pace, and the equity's 30-day at-the-money implied volatility has popped 16% to 28.6%, underscoring the accelerated demand for short-term contracts.
In fact, nine of the 10 most active options expire at today's closing bell, and all have seen volume exceed open interest, hinting at new eleventh-hour bets. It looks like a healthy portion of last-minute option bulls are buying to open the weekly 11/14 325-, 327.50-, and 335-strike calls, to bet on continued upside through the rest of the session.
Digging deeper, one speculator took the road less traveled, in an attempt to exploit higher short-term option prices. Specifically, it seems the trader sold to open a block of weekly 11/14 325-strike puts for $0.85 apiece, and simultaneously bought to open an equal amount of weekly 11/14 320-strike puts for $0.27 apiece, resulting in a net credit of $0.58 per pair of options.
By employing the bull put spread, the trader can pocket the entire net credit as long as AMZN remains north of $325 (sold put strike) through the close today. Risk, meanwhile, is capped at $4.42 per spread (difference between strikes, minus net credit), should AMZN breach $320 in the next few hours.
Meanwhile, there's lots of Street chatter about a well-timed Amazon.com, Inc. (NASDAQ:AMZN) bet placed yesterday. The trader bought roughly 7,100 January 2017 300-strike calls for $71.90 apiece, or nearly $51 million total (number of options * 100 shares per contract * premium paid), when AMZN shares were lingering near $316. The volume-weighted average price of the LEAPS now is $75.96 -- a gain of $4.06, or $2.89 million total.