China Finance Online Co. Limited (JRJC) Bears React to Short-Seller Report

China Finance Online Co. (ADR) (NASDAQ:JRJC) gets a lift after the company responds to short-selling report

Jun 4, 2015 at 1:59 PM
facebook twitter linkedin


After falling out of the gate due to a damaging report that emerged yesterday from Geoinvesting, LLC, China Finance Online Co. (ADR) (NASDAQ:JRJC) has since turned positive. Helping JRJC reverse course is the company's response, which said it "contains numerous errors of facts, misleading speculations and malicious interpretations of events." The shares were 7.1% higher at last check, trading at $5, but were still on the short-sale restricted (SSR) list. Meanwhile, puts are trading at 10 times the expected intraday rate.

In lieu of shorting the stock, traders are placing long-term bearish bets by buying to open the January 2017 5-strike put. By purchasing the contracts at a volume-weighted average price (VWAP) of $2, these traders are betting on JRJC to breach $3 (strike less VWAP) by January 2017 expiration.

It's not the least bit surprising to see this interest in JRJC's puts. The security's Schaeffer's put/call open interest ratio (SOIR) of 0.95 is only 1 percentage point from an annual high. Simply stated, the stock's short-term option traders are far more put-skewed than normal. 

On the charts, China Finance Online Co. (NASDAQ:JRJC) has been a disappointment. Over the past three months, the shares have trailed the S&P 500 Index (SPX) by over 24 percentage points. What's more, the stock has encountered a stern layer of resistance from its 200-day moving average since late March.

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners