Amazon Inc (NASDAQ: AMZN) announced it will be raising its Fulfillment by Amazon (FBA) fees, starting Jan. 18, 2022, which analysis suggests could raise $3.1 billion in incremental revenue.
While the gains on the stock Friday have been muted (+0.22%) as of this writing, it’s not an issue of trading volume, as the stock has traded over 3.8 million shares versus the 10-day average of 3.3 million.
But the more unique data point is in the options market, with over 680,000 contracts traded Friday (image below).
Why It Matters: Prior to Friday, there were approximately 531,000 calls and 570,000 puts for a total of 1.01 million options. Of those, approximately 37% (407,000) are expiring Friday.
Thus, the 681,000 contracts traded Friday represent 67% of the total options in one day. Granted, 407,000 of them are set to expire, so a good portion of the options traded could be options that are being closed or monetized.
But that doesn’t account for the fact 73% of the contracts traded today have been calls, which suggests a strong bullish bias in the market.
What’s Next: Amazon has all-time highs just ahead near $3,770, yet the largest strike by volume for the Nov. 26 expiry is $3,75, with interest dropping off materially above here (image below).
The fact that option trades for next week aren’t showing much interest beyond the $3,750 strike suggests the stock will need new flows to break the $3,770 all-time highs.
Meanwhile, short-term option support is coming in around $3,700, with the next largest strike by volume at $3,600, which may offer support on a decent pullback should the stock fail to break the all-time highs.
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