Weibo Stock's Latest Sell-Off Rewards Options Bears

Options bears have targeted WB's June 55 put

May 23, 2019 at 10:01 AM
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    Weibo Corp (NASDAQ:WB) shares are trading down 11.8% at $45.12, fresh off a two-year low of $44.50. Media reports suggesting the U.S.-Sino trade dispute will turn into a "tech cold war" are weighing on Chinese stocks, and overshadowing WB's stronger-than-expected adjusted first-quarter profit. The Beijing-based social media site said revenue for the three-month period arrived at $399.2 million -- in line with estimates.

    U.S.-listed WB shares had already been struggling, shedding half their value year-over-year through last night's close at $51.16. Today's bear gap has the stock slicing through short-term support at the half-century mark, a level that hasn't been breached on a daily closing basis since April 2017.

    Options traders have been bracing for even more downside from WB stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.27 ranks in the 91st annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

    Drilling down, the June 55 put has seen the biggest increase in open interest over this two-week time frame, with nearly 6,000 contracts added. Trade-Alert indicates a number of these puts were bought to open this past Monday, May 20, for an average price of $6.20 apiece. The bid price on these in the-the-money options was last seen at $12.00, meaning put buyers are already staring at a handsome profit.


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