2 Chinese Stocks Soaring Today

YECO will sell restricted shares at $10 a pop to fund its latest purchase

Nov 19, 2018 at 2:03 PM
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The U.S. stock market is spiraling today on tech sector weakness. While entertainment name Walt Disney Co (NYSE:DIS) is getting hit with broader headwinds, Chinese stocks Nio Inc (NYSE:NIO) and Yulong Eco-Materials Ltd (NASDAQ:YECO) are bucking the bearish bias. Here's a closer look at what's moving shares of DIS, NIO, and YECO.

Disney Clears a Big China Hurdle

Walt Disney cleared a key hurdle in its bid to buy 21st Century Fox's (FOXA) entertainment assets, after China gave a green light to the deal. After gaining as much as 1.4% earlier, though, DIS stock was last seen down 0.3% at $115.87.

Nevertheless, the equity is still trading comfortably north of its 80-day moving average -- currently located at $113.81 -- which has contained pullback attempts since late September. Plus, Disney shares are up 7.7% on the year, and hit a three-year high of $120.20 as recently as Nov. 9.

Amid slightly accelerated options activity today, one speculator appears to be positioning for even bigger short-term losses by buying to open December 116 puts for $3.25. If this is the case, breakeven for the put buyer at the close on Friday, Dec. 21, is $112.75 (strike minus premium paid).

Citron Said Nio is More Than "Chinese Tesla"

Citron Research chimed in on Nio today, saying the Tencent-backed electric carmaker is "much more than 'Chinese Tesla.' Absurd short interest ignores compelling product and patient investor base." The noted short seller set a near-term $12 price target on NIO stock, representing expected upside of 50.9% to its current perch at $7.95 -- up 10.6% so far today.

Nio has surged 31% since its Big Board debut at $6 per share back on Sept. 12, but remains well off its Sept. 14 record high of $13.80. Options traders are targeting even more upside, too, with more than 51,000 calls on the tape so far -- four times the average intraday amount and closing in on the all-time high of 53,979 calls traded in a single day, hit last Wednesday. Buy-to-open activity has been detected at the December 8 and 9 calls, where almost 18,700 total contracts have been exchanged.

Michelangelo's Crucifixion is YECO's Latest Purchase

Eco-friendly building specialist Yulong Eco-Materials said it is buying Michelangelo's Crucifixion painting for $75 million. The purchase is still awaiting board approval, and will be funded by a the sale of 7.5 million YECO restricted shares at $10 apiece -- a 96% premium to last Friday's close at $5.10. As such, the equity is up 23.5% to trade at $6.30.

Volatility is nothing new for YECO stock, which surged almost 570% on Oct. 17 after the company announced the purchase of the Millennium Sapphire. The shares went on to tap a record high of $17.87 on Oct. 18, before pulling all the way back to $5 -- a former layer of resistance that may have switched to a more supportive role.

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