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Thread: Buying PUTS on BIDU

  1. Default Buying PUTS on BIDU

    Anyone else thinks this looks like a good play? I bought some June 100 Puts at $5.15 today. Based on the chart, it looks like its ready to head south. Thoughts? Think this is a good play?



  2. Default

    If I said it were a terrible play, would you sell the puts?

    Similarly, if I said it were an excellent play, would you hold?

    Point is, trust your own judgement.

    Set a profit target, and a loss target. If either is hit, react. You needn't worry about where price is going then. So if you must ask this question, perhaps you bought too many puts? Scale back, and you'll be able to sleep at night.



  3. Default

    There are couple of ways to look at the BIDU chart right now. There is a case for a head & shoulders top in the past year, while also the case for a head and shoulders bottom in a little less time frame. However, I would argue BIDU is in a downtrend since July and the 130 resistance level is also a key spot to breakout of the downtrend at this moment. The stock bounced off the downtrend and is trying to head south again. Therefore your put buy timing may be pretty good as it looks to test support of 115 over the next few weeks. I would personally set a stop in case buyers rush in and push it through 130/131 possibly confirming a downtrend reversal or at least a short term rally. Just my two sense.

  4. Default

    In my opinion BIDU is one of thousands of stocks that do not display a clear trend. Given my investing style has a technical bias I prefer to look for stocks that are trending. It's my belief the probabilities are with my trade if I invest in the direction of the trend. When a stock looks to be range bound or just sloppy with no clear s/r and the MAs are all crossing over eachother I would rather just step out of the way. If one really digs deep into BIDU maybe you could find a bias for one direction or the other but the signal is not clear and overwhelming. Better put, the short, medium, and long term trends are not in alignment and that makes it too risky of a trade for this trader.

  5. Default

    If you're just dying to short something take a look at ECA. This is a major natural gas producer in Canada. They are one of the purest plays on natural gas you can find as they spun off their oil producing segment which now operates as Cenovus [CVE].

    Notice how ECA is in a long-term down trend, the intermediate trend is lower, and on an intraday timeframe it just broke below a key support level. As a bonus it is still above key oversold levels as measured by the RSI(14). On a fundamental basis, they're losing money out the wazoo as nat gas prices approach 20-year lows. In sum, the technical aspects line up on all timeframes and the fundamentals and macro story agrees. ECA looks to be a much better short candidate than BIDU.

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