JD.com gets vote of confidence
Traders are loving the pullback in JD.com.
optionMONSTER's tracking systems show that 5,500 July 32 puts were sold for $0.60. Volume was more than 13 times open interest at the strike, which means that new money was put to work.
Put selling generates income while obligating investors to buy shares if they fall below a certain level. The trade reflects positive sentiment and a belief that downside will be limited. (See our Education section)
JD slipped 0.06 percent to $34.59 yesterday but is up 50 percent so far this year. The Chinese e-commerce company has grown by providing authentic products like handbags and sneakers in a market plagued by piracy. Revenue increased about 60 percent in the most recent quarter and is forecast to climb another 50 percent in the current period.
The company also gave traders a big winner earlier this year, with calls bought in March tripling by late April. Shares consolidating between $32 and $35 after the pop, so yesterday's put seller is looking for that range to provide support.
The next earnings report is estimated for mid-August, after the July 32s expire.
Disclosure: I own JD shares.
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