We have a wild week in store for all options traders - and one massive opportunity in AMZN that we haven't seen in a year...
This Friday is expiration Friday - the date many options expire - so volatility is bound to affect stock movement this week. This is a crucial date for options traders and can have implications for the underlying asset's price and market dynamics.
I've pulled up my cheap options scanner and I have a list of stocks that are on my radar.
Three things have my full attention - two sectors with potential upside that are seeing some action and a mega-cap that might have a crack in its armor...
Here's what's in play for the week of May 15...
First off, I want to start with the mid-cap banks. I've been watching this group closely, and while there may be more shoes to drop in this sector, some of these names are really moving. Truist Financial (TFC) and Charles Schwab (SCHW) are both seeing some pretty decent activity and are getting a little bit of a bid.
For SCHW, I'm looking for a move back up to $60 over the next couple of weeks. That's a move of around 17%. For TFC, I'm looking for shares to pop back to around $32 or $33 from recent prices of around $28.
Yes, implied volatility is still high and we could absolutely see banks fall further, but from what I'm seeing, we could see some of these names break out on big volume.
The other area where we're seeing some action today is the energy space. Now, this isn't showing up on my cheap options play, but the energy space is definitely getting a little bit of a bid following a decent-sized merger in the midstream areas.
Petrobras (PBR) has also seen a ton of activity over the past few weeks. The stock has a huge dividend coming up next week, and that's going to draw some interest. Its latest earnings results, announced on May 11, were good. But there are some other big players here as well - XOM, CVR, MRO, and MPC. These names may be bottoming and could catch some bids after a really rough show.
Finally, I'm watching Amazon (AMZN) this week. Implied volatility is at a one-year low, while 20-day volume is trading at a huge premium, and 10-day volume is right at where we're trading.
These megacaps have basically been holding up the whole market, and you have to wonder whether at some point these names are going to get a little overdone... and you could see a little bit of a drawback.
Now, I like AMZN long-term. It's a really great long-term investment, especially if you were buying it in the $80s and $90 when it was trading down there.
But AMZN has put in a 32% run since the start of the year, and we could be looking at a little bit of near-term downside in AMZN for the week. Shares look like they may be a touch overbought.
Check out this clip to see my video watchlist.
We'll be back on Friday with a recap of what happened this week, whether there are some opportunities, what opportunities out of my watch list I actually traded, and maybe take a little look ahead at the following week.
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