2 China Stocks Moving Higher on New Stimulus

Options traders lean bearish on BABA and JD

Digital Content Manager
Aug 28, 2023 at 10:26 AM
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China announced earlier it will support its struggling economy and property sector through new stimulus measures. The country cut its stamp duty on stock trading by half and eased residential housing loan rules, resulting U.S.-listed China stocks surging today. Alibaba Group Holding Ltd (NYSE:BABA) and JD.Com Inc (NASDAQ:JD) were last seen up 2.9% and 2.3% to trade at $92.40 and $33.72, respectively.

Alibaba stock has consolidated below the $93 level for the past couple of weeks, while overhead pressure at the $105 level has been in place for most of the year. Shares could conquer the 50-day moving average, however, if these gains hold. Year over year, BABA is down 5.8%.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BABA's 10-day put/call volume ratio ranks higher than 97% of readings from the past year. This means puts have been much more popular than usual of late.

Despite today's pop, JD.Com stock is still trading within a chip shot of its May 31, three-year low of $31.56. JD is also firmly below its descending 20-day trendline, which first emerged as an area of resistance earlier this month, and is down nearly 40% in 2023.

Short-term options traders have also been more bearish toward JD than the norm. This is per the equity's Schaeffer's put/call open interest ratio (SOIR), which sits in the 82nd percentile of annual readings.

 

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