Options Bulls Target Descending E-Commerce Stock

Call options are running at double their usual volume

Deputy Editor
Oct 15, 2020 at 1:51 PM
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China-based e-commerce name JD.Com (NASDAQ:JD) is modestly lower today, down 2% at $79.49 at last check. After bouncing off its 10-day moving average in late September, which the stock is contending with today, JD climbed on the charts to reach the $85 region earlier this week -- a chip-shot from the shares' Sept. 2, record high of $86.58. Though pulling back since those highs, the equity is still up 125.5% year-to-date.

JD October

Despite this week's dip on the charts, options bulls are coming out in droves. So far today, 53,000 calls and 17,000 puts have crossed the tape, with call volume running at double its usual rate. The December 80 call, where new positions are being opened, is the most popular by far. This means plenty of call traders are chiming in on more upside for JD by December expiration, which most likely has something to do with e-commerce sales during a busy time in the midst of coronavirus. 

This penchant for calls isn't unusual for JD.  In fact, of late, 3.29 calls have been bought for every put in the last 10 weeks at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What's more, this ratio is 70% higher than all other readings from the past year, meaning calls have been picked up at a faster-than-usual rate during this time period. 

Lastly, analysts have also been optimistic toward the security, This is per the nine of 12 covering brokerage firms that sport a "strong buy" recommendation coming into today's trading.

 

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