Unusual Options Activity In iQIYI
iQIYI, Inc., together with its subsidiaries, provides online entertainment services under the iQIYI brand name in China. It operates a platform that provides a collection of Internet video content, including professionally-produced content licensed from professional content providers and self-produced content. The company also operates movie theaters in China. In addition, it provides membership, content distribution, live broadcasting, and online gaming services.
iQiyi has a grip hold on Chinese market with over 100 million paying subscribers. For comparison purposes, Netflix has close to 200 million premium streaming memberships worldwide. But the difference is iQiyi's audience has growing at a much larger clip.
The last time iQIYI reported earnings, the stock sold off about 30% over the following weeks. This was despite revenues being in line with expectations and losses / share betting expectations. Then news in December about issuing more shares sent the stock down again, even though the capital would be used to create more content and beef up its technology. But today, iQIYI got some great news…when Jack Ma after being M.I.A resurfaced.
Ma, the co-founder of Alibaba (BABA), resurfaced in a video aired by state media, speaking to rural schoolteachers. He had not been seen in public since Oct. 24. His disappearance came after comments he made that were critical of Chinese regulators, speaking about his desire to bring financial freedom to Chinese businesses and consumers.
The comments by Ma sparked a crackdown on Alibaba and other China internet companies. It also led to the suspension of a blockbuster $37 billion initial public offering for Alibaba's financial affiliate Ant Group. The Ant IPO would have been the largest ever. Ma is the largest shareholder of Ant, which was spun out of Alibaba.
Chinese authorities subsequently launched a probe into Alibaba for alleged anticompetitive behaviors on its e-commerce platform, which hit China stocks.
The news not only lifted Alibaba's stock, but many other Chinese stocks that trade on the US equity markets too. But the Smart Money thinks these stocks, in particular have more upside. The Smart Money bought over 34,000 call options at the $24 strike price that expire on February 21st.
I hate to bet against the Smart Money, but price is going to have a tough time getting through the weekly supply at $23.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance Beta
