AMZN has several layers of support on the charts
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The shares of Amazon.com Inc (NASDAQ:AMZN) recently formed a symmetrical triangle pattern on the daily chart, as well as a large cup pattern on the weekly chart. The equity also held its 50-day moving average with a break above the 20-day trendline and maintained support at its $135 level despite recent volatility, which had it oscillating between its January and March 2022 lows and July peak.
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Amazon.com stock’s 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has rolled over near year-to-date highs, with a sustained move lower producing a nice rally earlier this year. It’s also worth noting that large open interest (OI) at the 135-strike could be supportive of any pullbacks.
Now looks like a good time to weigh in with options. The equity’s Schaeffer’s Volatility Index (SVI) of 25% sits higher than just 5% of readings in its annual range, meaning options players are currently pricing in low volatility expectations. Our recommended call option has a leverage ratio of 7.0, and will double on an 18.7% pop in the underlying shares.