Bulls see momentum behind Sohu.com

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Sohu.com has been rallying, and one trader thinks there is still gas in the tank.

optionMONSTER's Heat Seeker monitoring program detected the purchase of almost 2,100 June 60 calls, most of which priced for $1.20. Volume was more than triple previous open interest at the strike.

The investor now has the right to buy shares in the Chinese Internet company for $60 through expiration, no matter how high they might climb. That gives would provide significant leverage in the event of a rally, but those contracts will also become worthless if the stock declines. (See our Education section)

SOHU is off a penny at $49.28 in afternoon trading but is up 29 percent in the last three months. Chinese equities have dramatically outperformed the S&P 500 in the last three months, according to our proprietary researchLAB analysis tool, as the country's economy continues to gain momentum.

The company is also scheduled to report fourth-quarter results before the bell on Feb. 4.

Total option volume is 3.5 times its the daily average so far today, with calls dominating the activity.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: SOHU

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