Baidu Stock Gains After Google's China Update

Now is an attractive time for near-term traders to bet on Baidu stock

Managing Editor
Aug 17, 2018 at 9:44 AM
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Shares of Chinese internet name Baidu Inc (NASDAQ:BIDU) are up 2.6%, at $223.02 in early trading after sector peer Google said it is not close to launching a search engine in China. The Alphabet (GOOGL) subsidiary's announcement comes after employees criticized the company for not providing enough details and transparency on the project.

Today's lift was much-needed for BIDU, with its long-term performance on the charts anything but impressive. The security suffered a post-earnings bear gap and fell below the 320-day moving average -- for the first time in over a year -- on Aug. 1. Plus, just on Thursday the stock fell within a chip-shot of its Feb. 9 low near $207. 

Digging into options, short-term traders are more call-skewed than usual, with its Schaeffer's put/call open interest ratio (SOIR) of 0.63 ranking in the 1st percentile of its annual range. This indicates that near-term call open interest outweighs put open interest by a wider-than-usual margin right now.

What's more, now may be a good time for near-term traders to jump onto Baidu stock with options. This is per the stock's Schaeffer's Volatility Index (SVI) of 30%, which ranks in the low 14th percentile of its annual range. This suggests that muted volatility expectations have been priced into short-term BIDU options.

 

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