E-Tail Stock's Luck Could Turn Around in August

The equity underperformed last month

Digital Content Manager
Aug 4, 2022 at 12:03 PM
facebook twitter linkedin


JD.Com Inc (NASDAQ:JD) is getting a boost today, last seen up 3.3% at $63.12, likely sparked by sector-peer Alibaba's (BABA) post-earnings pop. Unlike most of the market, JD suffered a 7.4% drop in July, with several breakout attempts thwarted by the 180-day moving average. The security is once again running into pressure at this trendline. However, JD has already tacked on 6.5% in August, and there's evidence the China-based e-tail stock could see even more upside as the month continues. 

Specifically, JD stock just pulled back within one standard deviation of its 80-day moving average after a lengthy period trading above the trendline. According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, five other similar instances occurred in the last three years. After 80% of these occurrences, JD enjoyed a positive one-month return, averaging a 4.7% jump. A similar move from its current perch would put the security just above the $66 level, marking a breakout above the aforementioned 180-day moving average. 

jd aug 4

Sentiment surrounding JD is already quite bullish. Just one of the 10 analysts in coverage considers the stock a "hold," compared to nine "buy" or better ratings. Plus, short interest dropped a whopping 29.7% in the last two reporting periods. 

Meanwhile, short-term options traders are taking a call-heavy stance. This is according to the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.64, which sits higher than just 12% readings from the past year. 

Considering this, now might be the perfect time to speculate on JD's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 53% sits in the relatively low 20th percentile of its annual range. In other words, options players are pricing in lower-than-usual volatility expectations at the moment. 

 

  

These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!

 

Common mistakes options traders make
 


 


 
Special Offers from Schaeffer's Trading Partners