OptionsHouse

Options Trading News

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.)
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »