Chinese Crackdown Brings Out Sina Corporation (SINA) Bears

The Chinese government plans to punish SINA Corp (SINA) for censorship violations

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Published on Apr 13, 2015 at 12:03 PM
Updated on Jun 24, 2020 at 10:16 AM

SINA Corp (NASDAQ:SINA) is getting thrashed today, down 6.6% at $35.02, after Chinese regulators vowed to crack down on the Internet company for self-censorship issues. Amid the swoon, traders are focused on the stock's puts, which are being exchanged at more than twice the usual intraday rate. Also, the equity's 30-day at-the-money implied volatility has popped 8% to 38.3%, suggesting speculators are on edge about SINA's future price action.

Digging deeper into today's activity, it appears traders are buying to open the April 35.50 and 35 puts, which are SINA's two most popular options so far. The in-the-money put buyers think the shares will extend their deficit south of $35.50 by front-month expiration at Friday's close, while the at-the-money speculators expect the stock will breach $35 through the option's short lifetime.

Put buying on SINA has been accelerated relative to call buying in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.70 outranks nearly three-quarters of all readings from the past year.

Meanwhile, on the charts, SINA Corp's (NASDAQ:SINA) nosedive has the shares sitting back below their year-to-date-breakeven, after sector-wide tailwinds lifted them above the crucial level last week. Longer term, the stock has struggled significantly, shedding one-third of its value year-over-year.

Daily Chart of SINA since December 2014


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