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July 29, 2013  Mon 5:16 AM CT

YOKU: SEE CHART GET CHAIN FIND STRATEGIES
Chinese Internet stocks have been incredibly strong recently, and the lighting struck Youku Todou on Friday.

optionMONSTER's Heat Seeker tracking system detected unusual activity in the August 19 calls, with some large blocks snapped up early for $2.35 to $2.50. More than 2,600 contracts changed hands at the strike by the closing bell.

These long calls lock in the price where stock can be purchased in the Beijing-based company, which provides streaming videos. Given their relative cheapness, they can generate some significant leverage from even a modest move in the share price. That happened on Friday as YOKU kept nudging higher, and at one point those calls traded for as much as $3.30--a gain of about 40 percent. (See our Education section)

YOKU closed Friday at $21.27, up 3.76 percent on the session. It's been lagging its peers and is ranked by our researchLAB service as the worst-performing Chinese Internet stock in the last three months. Others such as Sina and Baidu have been knocking the cover off the ball in recent weeks.

Overall option volume in Youku was 7 times greater than average in the session. Calls accounted for four-fifths of the total.

(A version of this post appeared on InsideOptions Pro on Friday.)
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