Baidu Inc (BIDU) Options Traders Pick Sides Ahead of Earnings

Baidu Inc (BIDU) will report earnings tonight

Oct 27, 2016 at 2:48 PM
facebook X logo linkedin


Ahead of tonight's earnings report, Baidu Inc (ADR) (NASDAQ:BIDU) call options are flying off the shelves. Roughly 20,000 contracts are on the tape -- compared to an average daily volume of 10,000 -- while call options roughly double the number of puts on the tape so far.

Among the options in the lead is the weekly 10/28 175-strike call. Based on data from the International Securities Exchange (ISE), there looks to be a mix of buy- and sell-to-open activity happening at the near-the-money strike. The goal for buyers is for BIDU to rally past $175 by tomorrow night -- when the option expires -- hopefully boosted by an upbeat earnings report. Meanwhile, sellers are counting on the strike to act as a short-term speed bump.

Longer term, though, call buyers certainly have had the advantage. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have purchased nearly twice as many calls as puts over the past two weeks. The resultant call/put volume ratio of 1.93 ranks in the bullishly skewed 82nd annual percentile.

However, history doesn't appear to be on the side of option bulls. Over the last eight quarters, BIDU has ended lower in the session subsequent to earnings five times. Most recently, the shares shed 3.6% in the immediate aftermath of the company's late-July report.

High hopes aren't restricted to the options arena, though. Two-thirds of analysts rate BIDU a "buy" or better. Plus, short sellers have been hitting the deck, with short interest plunging 12.6% in the most recent reporting period. As it currently stands, a mere 1.6% of the stock's total float is sold short.

Technically speaking, Baidu Inc (NASDAQ:BIDU) has had a seesaw year, and is currently at about a 50% retracement of its February lows and late-April highs. Overall, though, the setup doesn't look especially promising for the stock. Despite being 1.2% higher at $174.87 today, the shares' year-to-date deficit sits at 7.5%. Plus, the overhead 100-week moving average, which rejected a BIDU rally in the spring, could once again limit any potential moves higher.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI