Options Traders Think Baidu's Stock Is About To Rebound

Baidu Inc’s BIDU stock has plummeted almost 40% since reaching an all-time high of $354.82 on Feb. 22.

Despite announcing a partnership with Volvo parent Geely Automobile Holdings Limited GELYY back in January to enter into the popular electric vehicle space, U.S./China tensions have overshadowed any positive sentiment in Baidu’s stock.

Some options traders think that is about to change, however, and bet almost $1.13 million Baidu’s stock is going higher.

The Baidu Option Trades: Below is a look at the notable option alerts, courtesy of Benzinga Pro:

• At 10.29 a.m., Thursday a trader executed a call sweep, near the ask, of 338 Baidu options with a $227.50 strike price expiring on April 30. The trade represented a $59,488 bullish bet for which the trader paid $1.76 per option contract.
• At 11.00 a.m., a trader executed a call sweep, near the ask, of 500 Baidu options with a $245 strike price expiring on May 21. The trade represented a $129,000 bullish bet for which the trader paid $2.58 per option contract.
• At 11.11 a.m., a trader executed a call sweep, near the ask, of 295 Baidu options with a $220 strike price expiring on April 30. The trade represented a $119,475 bullish bet for which the trader paid $4.05 per option contract.
• At 11.49 a.m., a trader executed a call sweep, near the ask, of 972 Baidu options with a $220 strike price expiring on April 30. The trade represented a $398,520 bullish bet for which the trader paid $4.10 per option contract.
• At 11.52 a.m., a trader executed a call sweep, near the ask, of 500 Baidu options with a $245 strike price expiring on May 21. The trade represented a $142,500 bullish bet for which the trader paid $2.85 per option contract.
• At 12.28 p.m., a trader executed a call sweep, near the ask, of 500 Baidu options with a $245 strike price expiring on May 21. The trade represented a $148,000 bullish bet for which the trader paid $2.96 per option contract.
• At 1.35 p.m., a trader executed a call sweep, near the ask, of 500 Baidu options with a $245 strike price expiring on May 21. The trade represented a $131,000 bullish bet for which the trader paid $2.62 per option contract.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately. 

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position. 

BIDU Price Action: Shares of Baidu closed at $214.56.