Takeover rumors are swirling around Sohu.com, and call buyers
are stepping in.
optionMONSTER's Heat Seeker monitoring system detected the purchase
of more than 4,100 September 55 calls, mostly of which priced for
$0.25 to $0.30. Volume was almost twice open interest in the
SOHU rose 1.91 percent to $51.31 in morning trading and is up 19
percent in the last three months. The Chinese Internet stock has
been moving sideways for the last two years and is still about 40
percent below where it peaked in May 2008.
This morning's call buyers seem to be reacting to chatter that the
stock may be takeover target by online search giant Baidu.com.
SOHU reported better-than-expected sales and earnings on July 26.
Overall options volume in SOHU is 10 times greater than average so
far today, with calls outnumbering puts by 21 to 1.
There is also evidence that sentiment is improving in Chinese
stocks. The iShares FTSE/Xinhua China 25 Index (
) exchange-traded fund, which tracks the country's broader markets,
has been outperforming the S&P 500 over the last three- and
That marks a contrast with the year-to-date and 12-month periods.
This year's shift in relative performance indicates that buyers are
starting to return to China, almost three years after FXI peaked
around $70 in October 2007. It now trades for $40.80, up 0.64
(Chart courtesy of tradeMONSTER)
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