TME Eyes Fourth-Straight Loss, Despite Impressive Q3 Results

Options bulls are still charging the stock today, regardless

Deputy Editor
Nov 11, 2020 at 10:33 AM
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The shares of China-based media name Tencent Music Entertainment Group (NYSE:TME) are down 1.7% at $14.70 this morning, reversing course from their premarket gains following a 16.4% rise in revenue for its third quarter, and a 46% jump in paid subscribers to its music streaming service. Despite this, the security is now pacing for its fourth-consecutive loss, and just slid back below a former rejection level at the 50-day moving average. 

A broader look at the charts, however, shows TME boasting a 27.3% year-to-date lead. Plus, it looks like the 140-day moving average, which staved off a pullback in late October, is still holding out as an area of support on the charts.

Analysts still feel optimistic on the stock, with seven of the nine in coverage calling it a "buy" or better. Plus, the 12-month consensus price target of $17.99 is a 21.5% premium to current levels. 

Options players, on the other hand, have taken a more pessimistic stance. In fact, during the past 10 days, 3.44 puts were picked up for  every call at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 98% of readings from the past year, suggesting a healthier-than-usual appetite for long puts of late. 

Drilling down to today's trading, it looks like calls are king. So far, 2,348 calls have crossed the tape -- four times the intraday average -- compared to just 533 puts. The November 15 call is the most popular, followed by the 16 call in the same monthly series. 

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