Analyst Expects Big Moves for Baidu Stock

Options bulls have flocked to the Chinese tech name

by Emma Duncan

Published on Nov 11, 2019 at 9:49 AM
Updated on Jun 24, 2020 at 10:16 AM

Mere days off its recent post-earnings pop, Chinese tech name Baidu Inc (NASDAQ:BIDU) has received yet another bull note, this time out of Oppenheimer. The analyst upgraded the stock to "outperform" from "perform," with a price target of $145. Regardless, BIDU is down 1.5% this morning at $122.74, as the broader equities market sells off on U.S.-China trade concerns

Longer term, Baidu stock has struggled to gain momentum since a rapid descent from its early April peak brought it to a six-year low of $93.39 in mid-August. The security has shed 21% in 2019 alone, and last week's surge higher was capped by BIDU's 180-day moving average.

Digging deeper, Baidu stock's 50-day call/put volume ratio across the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 2.80, and ranks in the 95th annual percentile. In other terms, this shows a stronger-than-usual demand for long calls relative to puts in recent weeks.

In the wake of Baidu's earnings report, implied volatility levels have imploded, making near-term options attractively priced at the moment. The stock's Schaeffer's Volatility Index (SVI) of 32% sits in just the 18th percentile of its annual range, meaning now is an opportune time to speculate on BIDU's short-term trajectory with options.

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