Amazon Options Attract Investors Seeking Protection Against Continued Stock Sell-Off

Less than 30 minutes into the trading day, a block trade for put options giving the holder the right to sell 600,000 Amazon shares at $150 each by Sept. 20. That's the biggest of the bearish unusual options trade posted just after 10 a.m. Friday. The strike is much lower than the current price of $162.16, after declining almost 12%.

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Shares of the tech titan tumbled after reporting second quarter sales and third quarter outlook that missed analysts' estimates amid weakness in online stores. That could signal that the retail giant isn't immune from slowing consumer spending.  

While net sales for the three months ended June 30 rose 10% to $148 billion, that trailed the $148.78 billion expected, according to the estimates compiled by Bloomberg. In the same earnings results released late Thursday, the company forecast third-quarter sales of $154 billion to $158.5 billion. The midpoint of that outlook is below the $158.4 billion expected by analysts.

Online stores, third-party seller services and subscription services trailed analysts' estimates even as the the company held its biggest shopping event, the 10th Prime Day in the second quarter. The bright spots were in the company's cloud business, the Amazon Web Services, and its advertising services that these weren't enough to assuage investors.

Across the 18 options expiration dates for Amazon stretching through December 2026, call options that give the holders the right to buy the stock at $170 attracted the heaviest volume, with 82,670 contracts changing hands as of 11:36 a.m. Holders are rushing to unload the contracts that have fallen out of the money as the stock price fall further below that.  

Unemployment rose in July to 4.3%, the highest level since October 2021, data released by the Bureau of Labor Statistics Friday showed. That fueled fears of a U.S. economic recession. Nonfarm payroll employment rose by 114,000, weaker than the average monthly gain of 215,000 in the past year.

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