President Donald Trump and a parade of US business leaders arrived in Beijing for talks with Chinese President Xi Jinping on Wednesday, with market bulls following suit.
Chinese stocks, ETFs and related themes posted the biggest gains in recent months. E-commerce giant stocks alibaba Stocks soared 8% and led a 2.5% rise despite earnings released this morning that fell short of most expectations. iShares China Large Cap ETF (FXI).
Alibaba, 5th
Alibaba had about five times more call trades than puts, with more than 75,000 call purchases compared to less than 12,000 put purchases, according to ThinkOrSwim data. Of the $160 million in option premium traded as of midday Wednesday, 88% were calls, according to Spot Gamma.
China-focused ETFs were even more popular. of KraneShares China Internet ETF was a top 10 security for most of the day by options trading volume, with more than 750,000 contracts traded and nearly all of the premium ($48 million of the $50 million) paid in calls. Nine of the top 10 contracts by value were buy calls, and the most popular contract by volume was a 32-strike call expiring on Friday.
“There has been a noticeable increase in discussion regarding the short squeeze in KWEB and new momentum in BABA,” Neil McDonald, U.S. CEO of Asia-based trading platform Mumu, said in an email. “Many retail traders are calling this BABA’s ‘Trump effect,’ reflecting hopes that improved U.S.-China dialogue could provide a boost for Chinese tech companies that have been lagging for months.”
One surprising winner on this theme: ford motor, The company’s stock rose 13% after Morgan Stanley analysts said the company’s energy storage licensing deal with China’s Hyundai Amperex Technology (CATL) could be a positive catalyst.
Ford, 5 days
Ford’s options were significantly skewed bullish, with calls trading more than five times as much as puts and buying calls more than twice as much as selling. One prominent trader bought 7,000 shares of a $16.85 strike put that expires next January for $245,000, betting the stock will rise more than 25% between now and then.
