A strategy idea for options trading investors.
Underlying: Baidu Inc.
The BIDU’s back! Baidu Inc. (NASDAQ: BIDU) has been a stock I’ve had in my Newsletter, the Market Taker Edge, countless times in the past. It was historically an easy stock to get long. But it hit a rough patch. Well, BIDU is back at it. This week the stock ran from around $130 a share to close Friday at $143. I think it’s time to press the bet.
For those who don’t know and are into the fundamentals, Beijing-based BIDU is a Chinese-language Internet search provider conducting operations in China through several subsidiaries. It also holds the licenses and approvals necessary to operate the company’s Websites and provide online advertising services. In addition BIDU has launched a Japanese search service at www.baidu.jp. BIDU is scheduled to release its next earnings report on July 18 after the close.
If there’s one thing that BIDU has shown in the past is that it can run. Options provide some great leverage to play this stock. I like the BIDU August 145 Calls anywhere below $8.30. These can be a quick “in-and-out-and-nobody-gets-hurt” trade if we get a good pop in BIDU the beginning of next week. But I think they’re OK as a longer-term play (two to four weeks) as well.
Dan Passarelli of MarketTaker.com writes the Market Taker Edge options newsletter. Dan has more than 17 years’ experience in the options industry as a market maker, Options Institute instructor and author of “Trading Option Greeks.”