Tech-giant Amazon is expected to see a huge move upward following its earnings report according to those who study trends in the options and derivatives markets. They see a lot of options activity that would seem to indicate that the company is going to have a rather smashing earnings report and see a nice surge in the share price as a result according to CNBC.
The problem with predictions like this is that they often play the role of setting expectations rather high for all investors. If the company does not have quite as solid of an earnings report as we are all hopeful for, then the stock could actually decline even on a relatively strong report.
Currently, the options market is indicating a move of around seven or eight percent for the company. That is historically high as Amazon typically sees moves closer to five percent on an earnings report. Plus, the stock is at all-time highs right now, so a seven or eight percent move now is even more significant than it would be at lower prices.
There are others in the options market that are betting in the complete opposite direction. They would like to see Amazon have an earnings miss, or at least a report that leaves a lot to be desired. If that does happen, then the put options that bet against a stock could very well be quite profitable for those who are holding that. It is hard to say which way this one will go with absolute certainty, but there is little question that the earnings report is going to be monitored quite closely by all interested parties.
The last earnings report that came out for Amazon was back in October. At that point, the stock moved approximately seven percent on the news. That was an oversized move, but it was all in the positive direction. There are plenty of investors who are viewing that as a real sign that perhaps they should purchase as many shares of Amazon as they can afford now before the price climbs too high after the earnings report comes out. Even so, we still do not know which way this one is going to go.
Given that Amazon is exploring obtaining licenses to sell pharmaceutical products in a number of states, among other priorities, it is not all that shocking that they continue to set the market on fire with their innovative ways.