Amazon Leaps Over Tesla as Second Most Active Stock Option Amid AI Optimism

Luzi Ann Santos joined discussion · Dec 5, 2024 02:19

$Amazon (AMZN.US)$ stock options volume rose Wednesday, surpassing that of $Tesla (TSLA.US)$, as shares of the top cloud services provider rose to an intraday record high after unveiling its new array of powerful chips for artificial intelligence applications.

The company's cloud services division, the Amazon Web Services began offering the chips to customers, Bloomberg reported yesterday. $Apple (AAPL.US)$ is in early stages of testing Amazon's Trainium2 chips, CNBC reported, quoting Benoit Dupin, the iPhone maker's senior direct of machine learning and AI.

Amazon Leaps Over Tesla as Second Most Active Stock Option Amid AI Optimism

(To see Amazon's options chain, click here. See Tesla's options chain, click here and Nvidia's here.)

More than 889,600 Amazon stock options changed hands as of 1:06 p.m. across 20 expiration dates that stretch through Jan. 15, 2027. That surpassed their 20-day average of 698,363 contracts according to Bloomberg data. The total so far is bigger than the 881,960-volume seen in Tesla, which typically alternates with $NVIDIA (NVDA.US)$ in the top spot for the most active stock options.

The heaviest volume seen in Amazon contracts was concentrated in call options that give the holders the right to buy the stock at $220 in two days, exchange data tracked by moomoo showed. Trading jumped to 89,480 contracts so far for the most-active Amazon call option, more than quadruple the open interest.

The $220 calls gained wider appeal as the share price advanced, putting it less than $3 below that strike price, and boosting the odds that the contracts could be in-the-money before they expire on Friday.

Amazon shares advanced as much as 3.1% to $220, an all-time high. It last traded at $217.52, taking this year's gains to 44%, and outpacing the tech-heavy Nasdaq 100 Index's 27% rally.

Source: moomoo desktop app

The company's event underscored Amazon's strong AI capabilities, bolstering its competitive edge over rival cloud providers, Baird analysts who rate the stock as outperform, said, according to a Bloomberg report published Wednesday. Its multi-billion-dollar AI business is now growing at triple-digit growth rate, outpacing the expansion of AWS when it was at a similar stage, JPMorgan was quoted by Bloomberg as saying.

The chip clusters, with offers five times power for Anthropic's large language models for generative AI, highlighted that Amazon is "tightening the GenAI gap."

Still, unusual activities in the options market signal institutional investors could be hedging their positions in Amazon. The biggest among those activities involved an active buyer paying a $6.47 million premium to purchase call options that give the holder the right to buy 300,000 shares at $205 each by Feb. 21, 2025, data tracked by moomoo showed.

(To see the unusual option activities, click here. For the U.S. options market page, click here.)

Source: mopomoo mobile app

Data signals that the purchase may have been part of a multi-leg transaction posted at 11:23:56 a.m. Wednesday. While the biggest trade was bullish, the other transaction posted at that exact time had a bearish slant. It involved an active seller collecting a $3.72 million premium for writing call options that give the holder the right to buy 300,000 Amazon shares at $220 each in 79 days, data showed.

Share your thoughts on Amazon, Tesla and Nvidia in the comments section. And vote if you're bullish or bearish on Amazon.

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