Some rich people who know a lot about money think that JD.com's value might go down soon. They are buying things called "options" to protect themselves from losing money if the value goes down. This makes other people pay attention because it could mean something important is happening with JD.com's business or stock price. Read from source...
1. The title of the article is misleading and sensationalist, as it implies that "smart money" or sophisticated investors are betting against JD.com, while the article only discusses options trading activities without disclosing the identities of these investors. This could create a false impression of insider knowledge or confidential information among readers who may not be familiar with options trading.
2. The article uses vague and ambiguous terms such as "significant move" and "something big is about to happen" without providing any concrete evidence or reasoning behind these claims. This could create unnecessary fear, uncertainty, or doubt among readers and potentially influence their investment decisions negatively.
Bearish
Key points:
- Smart money is betting big in JD.com options, with a majority of investors being bearish on the stock.
- Benzinga's options scanner detected 17 extraordinary options activities for JD.com, indicating a possible big event or news coming up.
- The price target for JD.com is between $20.0 and $60.0, according to the major market movers.
In light of the recent options activities observed by Benzinga, I have analyzed the data and determined that there are potential opportunities and risks for investors in JD.com. Here are my suggestions based on different scenarios and risk appetite levels:
Scenario 1: Bullish scenario - If you believe that the bullish sentiment among some heavyweight investors is justified, and that JD.com will recover from its current price level of around $27 per share, you can consider the following options:
- Buy the June 17 $30 call at a premium of $1.85, which would give you the right to purchase one share of JD.com at $30 by expiration date. This option has a delta of 0.49 and offers a potential upside of 12.96% if JD.com reaches or exceeds $30 by June 17.
- Buy the July 15 $35 call at a premium of $1.35, which would give you the right to purchase one share of JD.com at $35 by expiration date. This option has a delta of 0.29 and offers a potential upside of 18.52% if JD.com reaches or exceeds $35 by July 15.
- Buy the September $40 call at a premium of $0.75, which would give you the right to purchase one share of JD.com at $40 by expiration date. This option has a delta of 0.16 and offers a potential upside of 29.81% if JD.com reaches or exceeds $40 by September.
Risk: If the bullish scenario does not materialize, you could lose up to the premium amount paid for each option, which ranges from $1.35 to $0.75 per contract. Additionally, there is a risk of unlimited loss if JD.com declares a dividend or undergoes a split before the expiration date, as this would adversely affect the value of your call options.
Scenario 2: Bearish scenario - If you believe that the bearish sentiment among most heavyweight investors is justified, and that JD.com will decline from its current price level of around $27 per share, you can consider the following options:
- Sell the June 17 $30 put at a premium of $1.50, which would obligate you to sell one share of JD.com at $30 by expiration date. This option has a delta of -0.49 and offers a potential downside of 26.3