Options To The Rescue For Amazon.com (AMZN)?

On the 3rd Friday of every month, we have monthly options expiration.

Time is of the essence with options and we're now just two days away from June options expiration. I can tell you one thing - there's a TON of net in-the-money put premium sitting on the table for market makers, so we all need to beware of sudden reversals to wipe out this put premium. Amazon.com (AMZN) is a perfect example of this. By our calculations, net put premium on AMZN stands at roughly $2.4 BILLION. Over the past 6 trading days, AMZN has fallen more than 20% from its early-June high and those June puts have SOARED in value. Check out the AMZN chart and its current double bottom (green arrows):

But like I said, there's still two more days to go and, over the years, I've seen a LOT of strange things happen into options-expiration Friday. If I owned AMZN puts (which I don't unfortunately), I'd be cashing them in here at price support and running for the hills. Market makers have a way of wiping out tons of call/put premium in the final days prior to options expiration and this month may be no different. Every dollar that AMZN gains between now and Friday's close will save market makers approximately $100 million. It'll be very interesting to see how AMZN (and the entire market) perform, given this short-term stake.

Want to know the net call/put premium and max pain prices for every NASDAQ 100 and DOW 30 stock leading into options expiration on Friday? Join our free 30-day trial and instantly download an Excel file containing the data.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.