Phoenix New Media has believers

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Phoenix New Media has been falling, but one investor apparently believes that the Chinese Internet stock is at an attractive level.

optionMONSTER's tracking programs detected the sale of 5,700 October 7.50 puts for $0.70. Volume was more than 380 times the previous open interest at the strike, which indicates that new positions were initiated.

Writing puts lets investors earn income in return for agreeing to buy shares if they fall below the strike price, which in this case is $7.50. The strategy reflects a favorable opinion about the company and has similar downside risk to owning shares. (See our Education section)

FENG declined $3.85 percent to $10.23 on Friday. It peaked around $13.40 a month ago but has been skidding lower as sentiment turns against Chinese Internet stocks. Our researchLAB analysis tool shows that other names in the space have been weak recently as well, including Baidu, Sina, and China DangDang.

The put seller may like FENG because of its strong growth trajectory, with earnings up 200 percent in the last year, and its track record of beating analyst estimates. The $7.50 strike price is noteworthy because that level was the stock's peak from 2012 and could now serve as support.

Total option volume was 34 times greater than average in the session.



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: FENG

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