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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 232.38-0.8%3:59 PM EST
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To: umbro who wrote (25570)11/11/1998 6:31:00 PM
From: umbro  Read Replies (3) of 164684
 
AMZN options report for 11/11/98

AMZN price:  126.625
Options Study for: NOV
    put  break-even:     118.67 OI =  18644 VOL =   5406
    call break-even:     130.23 OI =  21623 VOL =   4888
    max. pain:           119.95 R  =    0.9 R   =    1.1
Options Study for: DEC
    put  break-even:     111.31 OI =   3149 VOL =    619
    call break-even:     140.20 OI =   3345 VOL =    831
    max. pain:           124.93 R  =    0.9 R   =    0.7
Options Study for: JAN
    put  break-even:     102.75 OI =   5046 VOL =    196
    call break-even:     145.20 OI =   9460 VOL =    351
    max. pain:           100.04 R  =    0.5 R   =    0.6
Options Study for: APR
    put  break-even:      97.04 OI =   2490 VOL =    451
    call break-even:     156.09 OI =   2613 VOL =     47
    max. pain:           125.07 R  =    1.0 R   =    9.6
net long/short:   0.77 mil.
i.v. for NOV = 0.74
i.v. for DEC = 0.82
i.v. for JAN = 0.89
i.v. for APR = 0.91


A little over one week from expiration, and the "max pain" calculation
is calling for a close at the 120 level on Nov. 20. The implied
volatility picture is taking on the more classic picture of
volatility increasing as the options move further out in time.
Lots of volume in the April puts today ... 200 traded at the
140 strike for a cost of $36.50 (which sets the break-even
at expiration at 104) The at-the-money April 125 puts traded
at an implied of 90% and cost $27.

Given AMZN's volatility, and unpredictability, long straddles
are looking interesting, especially if you're wllling to "leg out"
of them. Although if you'd held the Nov 135 straddle (long
a Nov 135c and long a Nov 135p), you'd have lost 0.50 close-to-close,
there was a potential $3 profit on the initial $14 investment
if you'd tried to time the moves. For a hypothetical trade,
watch the Nov. 125c at $7.50 ask, and the Nov 125p at
$5.50 ask. Look to fade the opening move (if AMZN gaps down, then
dump the put, or if it gaps up, dump the call), and then look
for a favorable exit on the other side.
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