Amazon Stock Could Bounce Back Toward Record Highs

Big tech giant Amazon.com Inc (NASDAQ:AMZN) just staged a short-term pullback after brushing up against the $240 region, home to its Feb. 4 record high of $242.52. The stock's year-to-date level lingers below as potential support, however, as well as a historically bullish trendline. 

More specifically, the stock is within 0.75 of the 200-day moving average's 20-day average true range (ATR), after spending at least 80% of the last 10 days and 80% of the last two months above it. This has happened five other times over the past three years, after which the equity was higher one month later 80% of the time, averaging an 8.4% gain.  

A move of similar magnitude from its current perch at $221.65 would put AMZN at $240.26, right around that level of resistance and its record peak. With that potential ceiling in mind, now might be a good time to use options trading to bet on a short-term bounce. 

The security is seeing attractively priced premium. AMZN's Schaeffer's Volatility Index (SVI) of 29% ranks in the low 11th percentile of its annual range, meaning options traders are pricing in low volatility expectations.