We recommend selling the following OTM Call Option of AMZN.
Sell AMZN Feb 28 230 CE
Our analysis behind this recommendation is as follows:
A) Analysis of Stock Market Indices
Insight #1: The S&P 500 (SPY) & NASDAQ (QQQ) is showing a moderately BEARISH sentiment today! Check the Open Interest distribution for SPY, QQQ below.
The pie charts illustrate the bullish or bearish sentiment for each ticker {GLD, IWM, QQQ, SPY} by showing the distribution of Open Interest, color-coded as follows:
Insight #2: For SPY options expiring on February 28, 2025 (8 DTE), 96.6% of the total open interest is attributed to “Put Long Buildup”, “Call Long Unwinding and Call Writing” reinforcing a BEARISH sentiment.
B) Analysis of Mag-7 Stocks
Insight #3: AMZN shows the strongest BEARISH sentiment among the Mag 7 stocks, based on the Open Interest distribution across weekly (1 DTE) and monthly (8 DTE) option chains.
Insight #4: AMZN is the most BEARISH based on the weekly (8 DTE) option chains, with 36.3% of total Open Interest attributed to “Put Long Buildup,” 21.8% to “Call Long Unwinding,” and 39.2% to “Call Writing.” This distribution signals a strong BEARISH sentiment..
Insight #5: Additionally, AMZN shows strong BEARISH sentiment, as evidenced by the absolute Open Interest distribution across its weekly (1 DTE) and monthly (8 DTE) option chains.
Insight #6: To identify the optimal Strike Price for trading, we analyze the Open Interest at various Strike Prices for AMZN’s Call Options in the weekly (8 DTE) option chain.
Notably, the 230 CE Strike has an Open Interest of 7,979, a Delta of 22.8%, and a Option Premium of $1.14.
Conclusion
Based on our analysis, we propose to Sell to Open the following OTM Call Option of AMZN:
Sell AMZN Feb 28 230 CE
Appendix — My Trade
On February 20, 2025, at 10:37 AM, I executed the following trade:
Sell To Open AMZN Feb 28 230 CE @ $1.14
This trade is clearly reflected in the price chart of the AMZN 230 CE shown below:
I sold to open an AMZN Feb 28 230 CE at $1.14, collecting $114 per contract.
