Bulls Come Back to Youku Tudou


By Mike Yamamoto of OptionMonster

NEW YORK -- Youku Tudou (YOKU) jumped Thursday, and traders piled into the name for the second time in as many weeks.

OptionMonster's tracking systems detected the purchase of about 3,700 August 27 calls for 75 cents in the session. There was no open interest before the trades appeared, which indicates that this is fresh buying.

Several other strikes expiring in the next two months saw bullish activity as well. The trades followed call buying in the July 20 contracts about two weeks ago.

Long calls lock in the price where the stock can be purchased no matter how far it might climb. They could be sold before expiration at a profit if premiums rise with a rally, providing potentially significant leverage, but the contracts can quickly lose value if shares stall or pull back.

Youku's stock rose 4.37% to $22.95 on Thursday. The Chinese video-streaming company got hammered on May 23 after its last earnings report but found support around $19 and has been working higher this month. Short interest is more than 10% of the float.

Overall option volume in Youku Thursday was six times its daily average for the last month, with calls accounting for a bullish 81% of the total.

Yamamoto owns YOKU shares.

 

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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