Internet retailer
Amazon (AMZN) is up 44% over the past year, nearly double the return of the overall stock market. One trader sees shares trending higher over the coming weeks.
That’s based on the August 2 $220 calls. With 38 days until expiration, 13,711 contracts traded compared to a prior open interest of 145, for a 95-fold rise in volume on the trade. The buyer of the calls paid $1.35 to make the bullish bet.
Amazon shares recently traded close to $190, meaning the stock would need to rise by $30, or nearly 16% in a month for the option to move in-the-money.
Shares are right at their all-time high of $191.70, so it would also mean the stock continues to break higher in the coming weeks.
The move higher looks like the right direction, both in terms of price and in terms of Amazon’s operating performance. Amazon’s earnings are up 229%, and revenues are up 12%, even with fears of a slowing economy right now.
Action to take: Amazon’s upward momentum looks likely to continue over the next few weeks. Buyers of shares can likely see low double-digit returns from here before shares likely face a seasonal pullback in the fall.
For traders, the August 2nd calls are aggressive and unlikely to move in-the-money. But before expiration, they could potentially see triple-digit returns.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
