Wednesday, May 4, 2011

Nice reversal in Amazon. Options looking hot

Hi everyone. If you all followed the market today, you all saw the reversal in Amazon stock. Despite the Dow being down 130 pts at one time, Amazon held pretty well. Not only, did it hold well, the stock closed up 0.8% on a down day. This is pretty bullish. Alot of activity on the call side today. I saw people snatching up the May 220 strike relatively early in the day which raised my suspicions that the stock might reverse. Currently, the call strike is only trading at $0.45. I expect this to be an easy double or triple if the stock was to move higher over the next few days. If the stock were to hit $210 over the next few trading days, this would easily achieve this objective. I think it's a fairly cheap trade and one worth making :). Seems like some of the Options guys buying up this strike believe Amazon to break out much higher than its currently trading within a very short period of time.