A trader is looking for a steep drop in shares of Baidu as they trade right in the middle of their 52-week range.
BIDU is down 0.88 percent on the day, trading at $136.02. The Chinese search giant was above $140 on several occasions last week and is still above its 10-day moving average, though just barely. It was at a 52-week high of $165.96 last July and a 52-week low of $100.95 in early October, and shares are have been trending higher from support at $110 in the last two months.
The biggest print of the day in Baidu is in the September 80 puts, where a trader bought 2,200 of those contracts for $1.54 against previous open interest of 40. The delta of those puts was just -0.05, suggesting that there is only a 5 percent probability that those puts will expire in the money.
It is possible that this is a bet that BIDU will see a new low in the coming months, but we do see some stock buying in the minutes following the put activity, so this could be hedging the position .
It is also possible that this is a long volatility play . The average implied volatility and the 30-day historical volatility for the stock are both below 40 percent, their lowest levels since last June. (See our Education section)
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