Amazon (AMZN) drifts down $3.01 to $223 in active trading of 3.9 million shares ahead of Thursday afternoon’s earnings release. By way of comparison, typical share volume in AMZN through midday is 1.75 million. But options volume is light. 12,000 calls and 12,000 puts so far, or only about 75 percent the norm. The top trades are part of a spread, after 721 Aug 230 calls traded on the online retailer for $7.83 and 1,442 Aug 250 calls for $2.09. The 1X2, for $3.65, traded on ISE and data from the exchange is reporting an opening position traded customer-to-customer. So while one investor initiated the Aug 230 – 250 ratio spread, another opened a backspread. If bought, the spread offers its best payout if shares rally to $250 through the expiration, or 12.1 percent over the next 24 days. AMZN shares rallied 15.7 percent on 4/27 after earnings were last reported, but are down 1.7 percent since that time. Weekly 220 and 225 straddles are trading at about 8 percent of spot.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.