Amazon Runs In Blue Skies, Options Trades Pile In

Amazon.com, Inc. AMZN gapped up Tuesday morning and ran almost 5% into blue skies intraday.

On Monday, Jeff Bezos officially passed the CEO baton to Andy Jassy, who will now lead Amazon as it tries to sustain the market share it snagged during the pandemic. On Tuesday, Amazon announced the launch of its COVID-19 at-home test collection kit.

Previously available only to Amazon employees the test kit, which received emergency use authorization from the U.S. Food and Drug Administration, will allow all Amazon customers to test for COVID-19 from home. The kit will then be returned to Amazon which will process the results at its in-house laboratory using a sensitive method known as RT-PCR to detect the virus. The method is currently considered to be the “gold standard” diagnostic approach.

Options traders believe Amazon has more room to run and on Tuesday purchased over $11.38 million worth of bullish call contracts. One trader chose a whopping $5,000 strike price with a July 30 expiry.

See Also: Jeff Bezos Is Officially No Longer The CEO Of Amazon

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Amazon Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:38 a.m., a trader executed a call sweep near the midpoint of 597 Amazon options with a strike price of $3500 expiring on July 9. The trade represented a $5.60 million bullish bet for which the trader paid $93.91 per option contract.
• At 9:44 a.m., a trader executed a call sweep near the midpoint of 302 Amazon options with a strike price of $4000 expiring on July 16. The trade represented a $121,706 bullish bet for which the trader paid $4.03 per option contract.
• At 10:22 a.m., a trader executed a call sweep at the ask of 242 Amazon options with a strike price of $5000 expiring on July 30. The trade represented a $31,460 bullish bet for which the trader paid $1.30 per option contract.
• At 11:05 a.m., a trader executed a call sweep near the ask of 224 Amazon options with a strike price of $3600 expiring on July 9. The trade represented a $1.39 million bullish bet for which the trader paid $62.33 per option contract.
• At 11:05 a.m., a trader executed a call sweep near the ask of 622 Amazon options with a strike price of $3800 expiring on July 9. The trade represented a $424,204 bullish bet for which the trader paid $6.82 per option contract.
• At 11:18 a.m., a trader executed a call sweep near the ask of 728 Amazon options with a strike price of $3700 expiring on July 23. The trade represented a $3.81 million bullish bet for which the trader paid $52.38 per option contract.

AMZN Price Action: Shares of Amazon were trading up 4.6% to $3,672.25 at publication time.