China Stock For Short-Term Bulls

Now looks to be an attractive time to bet on short-term BILI options

Managing Editor
Apr 8, 2019 at 1:50 PM
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Chinese video concern Bilibili Inc (NASDAQ:BILI) is down 0.06% at $18.01 in today's trading, the shares still struggling to maintain positive territory following last Thursday's pullback near the round $17 level. However, during this same time frame, BILI moved to within one standard deviation of a key trendline -- one which also holds historically bullish implications for the stock.

Specifically, the video stock is within one standard deviation of its 80-day moving average after a lengthy stretch above it, per data from Schaeffer's Quantitative Analyst Rocky White. For the stock, this trendline has proven to act as support over the past three years. While there have only been two other times this signal has sounded during this time frame, the security saw an impressive average gain of 9.02% one month out, and was positive 100% of the time.

Daily BILI with 80MA Since Oct With Highlightr

Shares of BILI have been on a volatile run since its public trading debut in March 2018. From an initial public offering (IPO) price of $11.50, the stock has gained significantly, and now holds a year-over-year lead of 64%. However, the Chinese video stock has had no shortage of pullbacks since January, specifically to the aforementioned round $17 level -- of which is home to its historically bullish 80-day trendline.

Bilibili stock is heavily shorted. During the most recent reporting period short interest has dropped 25.4%, but still accounts for a healthy 12.4% of the stock's total available float. With 9.56 million shares currently sold short, it would take exactly two days for short sellers to buy back their bearish bets.

In closing, now looks to be an attractive time to jump onto BILI's short-term options. This is per its Schaeffer's Volatility Index (SVI) of 43%, which stands in the bottom percentile of its 12-month range. 

 

Short-term options on Cree were attractively priced when we recommended the trade. The security's Schaeffer's Volatility Index (SVI) of 32% registered in the 7th percentile of its 12-month range.
Short-term options on Cree were attractively priced when we recommended the trade. The security's Schaeffer's Volatility Index (SVI) of 32% registered in the 7th percentile of its 12-month range.
Short-term options on Cree were attractively priced when we recommended the trade. The security's Schaeffer's Volatility Index (SVI) of 32% registered in the 7th percentile of its 12-month range.
 

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