Unusual Options Activity In JD.com, Inc.

JD.com, Inc., through its subsidiaries, operates as an e-commerce company and retail infrastructure service provider in the People's Republic of China. It operates in two segments, JD Retail and New Businesses.

The other day was Singles Day in China. A holiday started by Alibaba. Singles Day this year got off to a bang. Singles Day sales hit $1 billion mark in 1 minute, 8 seconds. And within the first within the first hour, sales hit $12 billion, up 22% from last year. And within the first nine hours, sales hit $23 billion.

Alibaba alone sold goods worth over $38.4 billion in total, surpassing the $30.8 billion it grossed last year by 26%, the company said in a statement. Its main competitor JD.com reported sales of $29.17 billion during the holiday. Last year the company reached $23 billion in transaction volume.

JD.com started 2018 great, with the stock eventually hitting all-time highs. But then the US-China trade war became “must see TV” and China’s economy slowed and consumers stopped spending which hurt JD.com sales and profits. In addition, in September, JD.com founder and CEO Richard Liu was arrested in Minnesota after being accused of raping a university student. By November the stock fell more than 50% to around $20.

JD.com started 2019 strong, but the momentum somewhat stalled out in April. Regardless of the stock price, the company had a record-setting sales during its June anniversary celebration in June. Then in August the company’s second quarter earnings results exceeded expectations. And with a record-setting Singles Day, well that should also translate into another beat on earnings for the third quarter.

On Monday morning, Benzinga Pro subscribers received three option alerts related to unusually large JD trades.

At 10:18 a.m., a trader bought 927 JD call options with a $35 strike price expiring on Friday near the ask price at 42 cents. The trade represented a $38,934 bullish bet.

At 11:20 a.m., a trader bought 1,021 JD call options with a $36 strike price expiring on Friday near the ask price at 32 cents. The trade represented a $32,627 bullish bet.

At 12:10 p.m., a trader bought 747 JD call options with a $36 strike price expiring on Friday near the ask price at 34 cents. The trade represented a $25,398 bullish bet.

Source

All these bullish, short term options are because JD.com announces earnings in two days. And yesterday, on Tues, I noticed more bullish unusual options activity. The Smart Money bought over 10,000 December call options at the $37, $38 and $39 strike price. These options expire in 37 days and will be profitable if price can get to $39.36 before that time.

This one is going to be interesting as there is a major resistance/support band and a daily supply in front of price and in the way of the Smart Money making their bag.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.