New Options for Amazon: Strategic Moves for Investors

Investors in Amazon.com Inc (Symbol: AMZN) now have access to new options with a February 2025 expiration date. At Stock Options Channel, our YieldBoost formula has examined the AMZN options chain and highlighted one put and one call contract of particular interest.

Exploring the Put Contract

The put contract at the $225.00 strike price currently has a bid of $6.55. By selling this put contract, an investor agrees to purchase the stock at $225.00 but will also collect the premium, bringing the effective cost basis down to $218.45 (before any broker fees). This could be a favorable alternative for anyone interested in acquiring shares of AMZN at a rate lower than the current price of $228.00/share.

This $225.00 strike offers an approximate 1% discount compared to the current stock trading price, which makes it “out-of-the-money” by that same percentage. There’s a 58% chance that the put contract could expire worthless based on current analytical data, including greeks and implied greeks. Stock Options Channel will monitor these odds over time and publish updates on our website dedicated to contract details. If the contract expires worthless, the premium would yield a 2.91% return on the cash commitment, or 24.71% on an annualized basis — a strategy we refer to as YieldBoost.

Below is a chart depicting Amazon’s trailing twelve-month trading history, with the $225.00 strike highlighted in green:

Analyzing the Call Contract

On the calls side, there’s a $240.00 strike price contract available with a current bid of $5.70. If an investor buys AMZN shares at $228.00/share and sells this call as a “covered call,” they are agreeing to sell the stock for $240.00. Including the premium from the call, it results in a total return of 7.76% if the stock is called away by the February 2025 expiration (excluding any dividends and before broker commissions). However, if AMZN shares increase significantly, the potential upside could be limited, making it crucial to review AMZN’s past trading trends and business fundamentals.

A chart below illustrates AMZN’s trading history over the past twelve months, with the $240.00 strike marked in red:

The $240.00 strike price is about 5% above the current stock trading price, which means it is also “out-of-the-money” by that percentage. There’s a 63% chance that the covered call contract may expire worthless, allowing the investor to retain both the shares and the premium earned. Stock Options Channel will provide ongoing updates on these probabilities on our website, along with charts tracking the trading history of the option contract. Should the covered call expire worthless, it could offer an additional 2.50% return, or an annualized 21.22%, representing another YieldBoost.

The implied volatility for the put contract is 33%, while it is 36% for the call contract. Historical data shows that the actual trailing twelve-month volatility, considering the last 251 trading days and the current price of $228.00, stands at 28%. For more ideas on put and call options contracts worth considering, visit StockOptionsChannel.com.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.