3 China-Based Stocks Rewarding Option Bulls

Weibo Corp (ADR) (NASDAQ:WB), SINA Corp (NASDAQ:SINA), and Qihoo 360 Technology Co Ltd (NYSE:QIHU) are flying high

by Alex Eppstein

Published on Oct 16, 2015 at 12:43 PM

Chinese markets soared overnight, and a number of U.S.-listed stocks are also shooting higher today, amid the latest round of M&A rumblings. In particular, Weibo Corp (ADR) (NASDAQ:WB), SINA Corp (NASDAQ:SINA), and Qihoo 360 Technology Co Ltd (NYSE:QIHU) are each flying up the charts today -- likely to the delight of options traders.

WB was last seen 13.3% higher at $15.55, and has now powered back into positive year-to-date territory for the first time since early August. From a slightly longer-term basis, October has been a boon to the shares, which have jumped 33% month-to-date. Amid these gains, short-term speculators have grown call-skewed toward Weibo Corp. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.41 -- in the bottom quartile of its annual range.

SINA has popped 8.3% to trade at $47.23 -- more of the same for a stock that's advanced over 26% in 2015. In fact, since touching their most recent low of $32.61 in late August, the shares have exploded 45% to the upside. Not surprisingly, option traders have been buying to open SINA Corp calls over puts at an extreme pace in recent weeks. The equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 8.67 registers at the top of its annual range.

Finally, QIHU has tacked on 3.2% to trade at $55.33, as it continues to cruise atop its rising 10-day moving average. Nonetheless, the shares are still sitting on a 3.4% year-to-date deficit, and are approaching a potential layer of resistance at their descending 80-day trendline. These longer-term struggles haven't shaken the confidence of option bulls. In fact, Qihoo 360 Technology Co Ltd sports a 10-day ISE/CBOE/PHLX call/put volume ratio of 10.10 -- with more than 10 calls bought to open for each put. More significantly, this ratio ranks just 4 percentage points from an annual acme.

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