Qihoo 360 Technology Co Ltd (QIHU) Earnings Beat Could Spook Bears

Option traders, short sellers targeted Qihoo 360 Technology Co Ltd ahead of earnings

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Published on Nov 25, 2014 at 10:46 AM
Updated on Apr 20, 2015 at 5:09 PM

Qihoo 360 Technology Co Ltd (NYSE:QIHU) has spiked more than 5% this morning to trade at $72.99, as traders cheer the company's latest earnings report -- which included a better-than-expected per-share profit. Recent speculators, however, are likely not as happy, as sentiment leading up to last night's event was decisively bearish.

On the options front, QIHU's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.56 registers in the 70th percentile of its annual range. In other words, in the two weeks leading up to earnings, traders were buying to open puts over calls at a faster-than-usual clip, presumably anticipating a post-event swoon. An unwinding of this negativity in the face of QIHU's intraday rally could spell additional upside.

Options players aren't the only ones that got it wrong, either. In fact, 10.5% of QIHU's float is sold short, suggesting there's plenty of cash on the sidelines. Should the equity maintain its positive momentum, short sellers may be forced to cover, adding fuel to Qihoo 360 Technology Co Ltd's (NYSE:QIHU) fire.


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