New Options Trading Kicks Off for Amazon with Eye-Catching Contracts

Investors in Amazon.com Inc (Ticker: AMZN) are seeing fresh opportunities today as new options for the February 28th expiration start trading. Stock Options Channel’s YieldBoost formula has analyzed the AMZN options chain and pinpointed one intriguing put and one call contract.

Analyzing the $220 Put Contract

A put contract at the $220.00 strike price shows a current bid of $8.35. By selling-to-open this contract, an investor agrees to buy the stock at $220.00 while collecting the premium. This effectively lowers their cost basis to $211.65 (before any broker commissions). For someone already aiming to purchase AMZN shares, this could be a more appealing option than buying shares at the current price of $221.13 each.

The $220.00 strike is about a 1% discount compared to AMZN’s current trading price, meaning there’s a chance that this put contract may expire worthless. Data suggests a 56% likelihood of this outcome. Stock Options Channel plans to monitor these odds over time, publishing updates on our website.

If the contract does expire without value, the premium earned would provide a 3.80% return on the cash commitment, translating to about 27.16% annualized. We refer to this as the YieldBoost.

Exploring the $225 Call Contract

On the call side, investors can look at a contract with a $225.00 strike price, currently bidding at $8.80. Should an investor buy AMZN shares at $221.13 and sell-to-open this call contract, they commit to selling at $225.00. Adding in the premium means a potential total return of 5.73% (ignoring any dividends) if the stock is called away by February 28th (before broker commissions).

However, substantial gains could be missed if AMZN’s stock price rises significantly, making it crucial to review its twelve-month trading history and fundamentals. Below is a chart displaying AMZN’s trading data with the $225.00 strike price highlighted in red:

The $225.00 strike represents a 2% premium to the current stock price, implying that this covered call might also expire worthless. In such a case, the investor retains both the stock and the premium earned. Current data indicates a 51% chance of this happening. Stock Options Channel will track and update these odds on our website.

Should the covered call contract expire with no value, the premium collected would add a 3.98% increase to investor returns, roughly 28.48% annualized—another aspect of our YieldBoost metric.

Volatility Indicators

The implied volatility for both the put and call contracts stands at approximately 32%. In contrast, the actual trailing twelve-month volatility—analyzed from the last 251 trading days alongside today’s price of $221.13—is calculated at 28%. For further ideas on put and call options contracts worth exploring, check out StockOptionsChannel.com.

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Also see:

• CCCR Historical Stock Prices
• ARIZ Market Cap History
• MBBC Insider Buying

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