China News Sparks Volatile Session for These 2 Stocks

While SSC is soaring, YUMC is spiraling

Sep 11, 2018 at 2:45 PM
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The U.S. stock market is trading in positive territory on the back of rising tech stocks. Other names seeing moves to the upside are marijuana expert Tilray Inc (NASDAQ:TLRY) and blockchain name Ideanomics -- formerly known as Seven Stars Cloud Group Inc (NASDAQ:SSC) -- while fast-food stock Yum China Holdings Inc (NYSE:YUMC) is spiraling. Here's a quick look at what's moving shares of TLRY, SSC, and YUMC.

Tilray Options Traders Target More Upside

Tilray stock is up 9.7% to trade at $92.66, after the company said it exported its 2:100 medical cannabis product to the U.K. for use on a pediatric patient. Today's positive price action just echoes the withstanding trend, with TLRY shares up more than 300% since their July 19 open at $23.05. Plus, last week's negative reaction to a downgrade was short-lived, and contained near $72.50.

The bull gap has sparked of rush of activity among options traders, with more than 46,000 contracts traded. Most of the action is occurring on the call side, with the October 75 call seeing the heaviest volume. It looks like new positions are being purchased here for a volume-weighted average price of $17.48, which would make breakeven for the call buyers at expiration $92.48 (strike plus premium paid).

SSC Stock Climbs on Big China Deal

Shares of Ideanomics, which changed its name from Seven Stars Cloud in late August, are surging today on news the fintech name inked a $6 billion deal with China's First Auto Loan. In reaction, SSC stock is up 11.2% to trade at $4.99.

It's been a wild ride on the charts for SSC shares, as evidenced by their 30-day historical volatility of 227.2%, which registers in the 96th annual percentile. In fact, this metric topped out at a 52-week high last Wednesday, Sept. 5. More broadly, the security is up 11.5% year-to-date.

Options traders are betting on even bigger gains for Ideanomics stock. More than two-fifths of the 8,101 calls traded today -- five times the intraday average -- have crossed at the September 7.50 strike. All signs point to buy-to-open activity, too, meaning speculators expect SSC to climb north of $7.50, territory not charted since February 2012, by next Friday's close.

Yum China Shares Hit a Record Low Earlier

Yum China stock has plummeted 13.2% to trade at $31.99 -- fresh off an annual low of $30.10 -- after Bloomberg reported a group of Chinese investors had dropped their bid for the Yum! Brands (YUM) spinoff. The consortium cited worsening business conditions and risks associated with a potential U.S.-China trade war.

YUMC has been making a beeline lower since topping out at a record high of $48.75 in late January, down 34%. Short sellers have been cashing in their chips during this slide, too, though the stock's inability to capitalize on this buying power points to underlying weakness. In the past two reporting periods alone, short interest plunged 47.4% to 3.77 million shares. This represents a low 1% of the equity's available float, suggesting this potential source of sideline cash is nearly dried up.


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