Earnings Preview: Sohu.com Inc and Baidu Inc

Analyzing pre-earnings options trends on Sohu.com Inc (NASDAQ:SOHU) and Baidu Inc (ADR) (NASDAQ:BIDU)

Jul 24, 2015 at 2:39 PM
facebook X logo linkedin

Second-quarter earnings season kicked into high gear this week with a number of notable blue chips and tech titans releasing their reports. While a handful of big-time social media names will steal the spotlight next week, Beijing-based Internet issues Sohu.com Inc (NASDAQ:SOHU) and Baidu Inc (ADR) (NASDAQ:BIDU) will step up to the earnings plate on Monday.

  • SOHU will take its place in the limelight bright and early Monday morning, and option traders have been loading up on long puts in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.35 rests higher than 81% of all similar readings taken in the past year. In spite of the uncertainty surrounding the scheduled event, premium on SOHU's short-term options is relatively tame at the moment. Specifically, the stock's Schaeffer's Volatility Index (SVI) of 55% sits in the 36th percentile of its annual range. Looking back over the past eight quarters, Sohu.com Inc has averaged a single-session post-earnings swing of 5.6%, but this time around, the equity's near-term at-the-money (ATM) straddle is projecting a loftier 12.5% move. Technically speaking, the stock has shed 16.1% year-to-date to linger near $44.60 -- and has spent most of July moving in step with broader Chinese benchmarks. Today, in fact, SOHU is off 3.5%, after China's Shanghai Composite snapped its recent winning streak.
  • BIDU will unveil its results after Monday's close, and based on the equity's near-term ATM straddle, the options market is expecting an 8% post-earnings move. This is slightly more than the 6.2% swing the security has averaged over the past eight quarters. Speculators have been rolling the dice on a move to the upside -- BIDU's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.91 ranks in the 82nd annual percentile. Simply stated, calls have been bought to open over puts at a faster-than-usual clip. Meanwhile, Baidu Inc's short-term options are pricing in elevated volatility expectations, considering its 30-day ATM implied volatility (IV) of 42.1% sits just 5 percentage points from a 52-week peak. On the charts, the stock has been feeling the heat from its 140-day moving average since February, down over 5%. More recently, the shares have been tracking the moves of mainland markets -- and were last seen down 0.7% at $206.21.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI