Why Baidu's Rally Could Continue Until April

Shares of Baidu Inc BIDU jumped 6.84% to close Tuesday at $162.86, following the company’s strong fourth-quarter results.

On CNBC's "Options Action," Mike Khouw of Optimize Advisors said the stock traded more than four times its average daily volumes on Tuesday.

More than 50,000 call contracts were traded, and “a lot of that was short-dated upside call buying,” he added.

There was a buyer of 3,200 of the April 170 strike calls for an average price of $9.55 per contract, Khouw mentioned. Buyers of those calls are betting that the stock will rise by at least 10% over the next six weeks, he added.