3 Stocks to Watch: Amazon.com, Ford Motor, and Suncor Energy

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Today's column includes a look at a rise in call trading on Ford Motor ( F ) and Suncor Energy ( SU ), while put trading jumped on Amazon.com ( AMZN ). Each day, 3 Stocks to Watch focuses on stocks seeing heavy options trading and gives you a unique insight into each stock's sentiment backdrop.

Amazon.com ( AMZN )

After the close on Thursday, Amazon.com Inc. ( AMZN ) posted a fourth-quarter profit of $416 million, or 91 cents per share, as sales jumped by 36% to $12.95 billion. Analysts were expecting earnings of 88 cents per share on revenue of $13 billion. However, Amazon said that its fourth-quarter operating margins were 3.8%, below the 4.2% Wall Street was looking for. What's more, the company forecast first-quarter operating income between $260 million and $385 million, implying a margin range of 2.9% to 3.9%. The current consensus estimate for first-quarter operating margins is 5%.

Options players responded by sending more than 294,500 contracts across the tape. This surge in volume was more than four times the equity's average daily trading volume of 67,386 contracts, according to data from WhatsTrading.com. Furthermore, approximately 53% of the volume changed hands on the put side.

Sentiment toward the security is still firmly in the bulls' camp. The International Securities Exchange (ISE) reports that 1.11 calls were purchased to open for every one put purchased to open during the past 10 trading sessions. This ratio of calls to puts is higher than 63% of all other readings taken during the past 52 weeks.

Meanwhile, the Schaeffer's put/call open interest ratio (SOIR) for AMZN comes in at 0.96, which is lower than 86% of all those taken during the past 52 weeks. In other words, short-term options players have been more optimistically aligned toward the shares only 14% of the time during the past 12 months.

Wall Street still has a bullish outlook when it comes to the online retailer. According to Zacks , the stock has earned 23 "buy" ratings, 10 "holds," and two "strong sells."

Technically speaking, the shares of AMZN are down roughly 5% since the beginning of the year, falling below support at their 10-day and 20-day moving averages. However, the stock is currently clinging to longer-term support at its rising 20-week trendline. The shares of AMZN have not logged a weekly close below this moving average since mid-August.

 WEEKLY CHART OF AMZN SINCE JULY 2010 WITH 10-WEEK AND 20-WEEK MOVING AVERAGES

Ford Motor ( F )

Ford Motor Company ( F ) was also punished on Friday, after the automobile manufacturer reported a surprise drop in fourth-quarter earnings . Ford Motor reported net income of $190 million, or 5 cents a share. Operating profit came in at $1.3 billion, or 30 cents a share. Analysts were expecting operating profits of 48 cents a share. Ford's fourth-quarter revenue was $32.5 billion.

Meanwhile, more than 1,173,400 contracts crossed the tape on Friday, in response to the earnings news. This surge in volume was more than six times the equity's average daily trading volume of 180,763 contracts, according to data from WhatsTrading.com. In addition, approximately 64% of the volume changed hands on the call side.

Overall, there is a slight bullish bias among options players when it comes to F. The ISE and Chicago Board Options Exchange ( CBOE ) report that 4.4 calls have been purchased to open for every one put purchased to open during the past 10 trading sessions. This ratio of calls to puts is higher than 72% of all those taken during the past year. What's more, the SOIR for F comes in at 0.63, which is lower than more than half of the readings taken during the past year.

Wall Street is split down the middle when it comes to the car company. According to Zacks , analysts have awarded it seven "strong buys," six "holds," and one "strong sell."

Elsewhere, short sellers are adding to their bearish bets. During the most recent reporting period, the number of F shares sold short increased by 7.3% to 192 million. The simultaneous increase in both call buying and short selling could indicate that short sellers are hedging their pessimistic positions with optimistic options on F.

From a technical perspective, the shares of F plunged more than 13% on Friday, falling below key support at their 10-week moving average. However, the stock may find support at its rising 20-week trendline. F has been guided higher by these moving averages since March 2009.

 WEEKLY CHART OF F SINCE MARCH 2009 WITH 10-WEEK AND 20-WEEK MOVING AVERAGES

Suncor Energy ( SU )

Options traders jumped on Suncor Energy Inc. ( SU ) on Friday, as more than 55,900 contracts changed hands. This surge in volume was more than three times the stock's average daily trading volume of 18,414 contracts, according to data from WhatsTrading.com. Furthermore, options players were feeling optimistic, as 86% of the volume changed hands on the call side.

Suncor will report earnings before the open on Wednesday, Feb. 2.

Despite traders showing a preference for calls on Friday, puts have dominated on the ISE. During the past two trading weeks, 1.2 SU puts have been purchased to open for every one call purchased to open. This ratio of puts to calls is higher than 86% of all those taken during the past year.

Meanwhile, the SOIR for SU comes in at 0.86, which is higher than 95% of all those taken during the past 52 weeks. In other words, short-term options players have been more pessimistically aligned toward the shares only 5% of the time during the past 52 weeks.

As opposed to options players, Wall Street is totally enamored of the shares. According to Zacks , the stock has earned nine "buy" ratings and four "holds."

Technically speaking, the shares of SU have tacked on more than 4% since the start of 2011, and are riding the support of their 10-week and 20-week moving averages higher. In fact, the security tagged a new two-year high of $40.81 on Friday, and are now trading north of round-number resistance at the $40 level.

 WEEKLY CHART OF SU SINCE FEBRUARY 2010 WITH 10-WEEK AND 20-WEEK MOVING AVERAGES

Trading the News: A Contrarian View. Check out this special report from Bernie Schaeffer here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: AMZN , CBOE , F , SU

Schaeffer's Investment Research

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