SINA Options (SINA): Unusual Trading Activity
Options in Chinese internet company SINA (SINA) showed heavy activity yesterday as the S&P started to give back morning gains.
SINA received a huge vote of confidence before it releases earnings after the close today.
During yesterday’s trading session, our tracking system detected a trader come in and sell 2,550 SINA August $45 strike put options for $0.59 a piece. This trade was against open interest of 2,237 contracts, indicating that this was a new opening transaction.
The premium collected from the trade totaled $150,450.
Obviously, this put seller is betting SINA will hold that $45 strike price through this week’s expiration. And if it does, he’ll be laughing all the way to the bank!
I think the chances of this trade working out are good even though SINA was down today at $51.50. The Shanghai-based online media company has been beaten down along with other Chinese stocks, losing 55 percent of its value since last September.
So, any good news with today’s earnings should keep the stock price above the $45 per share level.
But before we go any further, let’s take a closer look at SINA…
For those of you who don’t know,Sina is a leading internet media company in China. In fact, the Sina portal is one of the most popular in China, ranking third in terms of user traffic in the country.
The company generates about 70% of its revenue from online advertising, with the rest coming from wireless value-added services.
As a recognized source of reliable online news and information, Sina has attracted a well-educated and relatively wealthy user group. This makes them an ideal venue for advertisers.
But that’s not all…
After building a successful blog business by leveraging strong connections with celebrities, Sina is replicating the model with its new Twitter-like Weibo business. Sina Weibo reports 300 million registered users and ranks sixth in China in terms of user traffic.
The company plans to begin monetizing its massive Sina Weibo user base during the second half of this year.
Bottom line…
SINA looks strong right now, and it seems that option traders believe it will remain strong well past earnings.
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Safe Trading,
Marcus Haber
Category: Unusual Options Trading Activity
