NetEase’s (NTES) stock option volume went ballistic yesterday, both call option and put option. NetEase’s stock price was also down 5% on high volume.
NetEase operates interactive online applications in China. It provides products in three segments: online game services, advertising services and wireless value-added services.
NetEase’s competitors include Sina Corp (SINA), Sohu.com (SOHU) and TOM Group (private).
NetEase’s stock price is up over 100% from its low price in December of 2008 and has taken a pretty good hair cut over the last couple of weeks. Yesterday’s haircut was in response to China’s increased online gaming restrictions related to foreign companies. As a result, NetEase may have to forgo marketing the game World of Warcraft in China, as NetEase licenses the game from a U.S. company Activision Blizzard (ATVI).
| Sign up now for PowerOptions 14-day free trial |
Call option volume for NetEase for October expiration was extremely large across strike prices from 35 to 43 yesterday and with only 4 days until expiration. Call option volume for November expiration was very large in the out-of-the-money call options in the 40 to 43 range. December 39 and 40 call options also showed a lot of interest yesterday. Everything was not bullish as, there was significant interest in October, November and December put options, but not as much as in the call options.
| See what the stock option experts are doing Sign up now for PowerOptionsApplied 30-day risk free trial |
The Strike of Pain for NetEase is very bullish with the strike of pain at 44.00 for October. The Strike of Pain represents the strike where the stock options buyers will lose the most money and the stock option sellers will gain the most money at expiration.
| Free stock option newsletter » return goal > 2% / month » works in any market |
 |
Even with bad news and its stock price taking a haircut, NetEase stock options activity looks bullish. Maybe the stock options activity is telling us NetEase is oversold at this price.
A covered call investing position for NetEase for November expiration looks attractive with a %if unchanged potential return of 6.7% and a %if assigned potential return of 9.8%. The timeframe for potentially realizing these returns is only 39 days. The call option to sell would be the November 40.00 with a ticker symbol of NGHKH.
| Want to protect your portfolio/401K from market downside? yet still benefit from market upside Sign up now for the free Sketch |
To enter the covered call investing position an investor would purchase the stocks in multiples of 100 shares and sell one call option for each 100 shares of stock purchased.
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions’ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
| Learn how to profit from winner stocks and protect yourself from loser stocks Download free Trade Simulator now |
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the covered call investment strategy.
| Learn to trade like the pros Signup for free Webinars now |
PowerOptions’ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags] online game, advertising, wireless, China, gaming restrictions, World of Warcraft, Strike of Pain, ATVI, Activision Inc., NTES, Netease.com Inc. ADR, SINA, Sina Corp., SOHU, Sohu.com Inc. [/tags]