Baidu.com (BIDU) hit a 52-week low of $99.71 this morning and has been rebounding on very heavy turnover of 7.5 million shares. The Chinese Internet names (SINA, YOKU, NTES) have been under pressure this week on concerns about China’s slowing economy. Options volume in BIDU is 2.5X the daily average, with 38,000 calls and 49,000 puts traded on the stock so far. July 100 puts, which are now almost 4 percent out-of-the-money and expiring at the end of the week, are the most actives. 12,600 traded, in small lots. The top trade is 211 contracts and apparently part of a July 100 – 110 bearish risk-reversal on BIDU for $1.33. However, 55 percent of the volume in the Jul 100 puts has traded on the bid. Some players might be writing premium after implied vols in BIDU rose another 9 percent to 50 this morning and selling downside puts on the view capitulation is at hand. BIDU has plummeted nearly 30 percent over the past three months.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.