The Online Retail Stock That Could Burn Options Bears

JD.com stock tends to fare well after pulling back to its 200-day moving average

Nov 2, 2017 at 11:31 AM
facebook twitter linkedin


Shares of Chinese online retailer JD.com Inc (NASDAQ:JD) have surged on the charts this year, tacking on roughly 50%. Since touching an all-time high of $48.99 on Aug. 8, the e-commerce stock has gradually pulled back to its current perch at $38.26. Nevertheless, this retreat could signal a buying opportunity, as JD stock nears a key trendline with historically bullish implications.

JD stock is trading less than one standard deviation above its 200-day moving average, which is docked at $37.54, after a lengthy stay above it. According to data compiled by Schaeffer's Senior Quantitative Analyst Rocky White, the last three meet-ups with this trendline resulted in positive one-month returns 100% of the time, with an average gain of 6.21%. A rally of this nature would send JD shares back above their 50-day moving average to the $40 neighborhood.

jd stock daily price chart nov 2

Options Players Up The Bearish Ante

In light of the security's recent price action, options traders have been growing increasingly bearish toward the online retailer. JD stock sports a 10-day put/call volume ratio of 0.45 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- good enough to rank in the 85th annual percentile. In other words, puts have been bought to open relative to calls at a faster-than-usual clip.

Short interest on JD also shot up 26.8% during the most recent reporting period to 37.11 million shares -- its highest level since early February. Should JD.com shares stage another sharp rally from their 200-day trendline, an unwinding of some of these bearish bets could create tailwinds for the equity.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners