May 6 - BIDU Follow up

A quick update on BIDU, after the massive gap up following the earnings call, the stock has come down a little and stabilized. However, after a decrease in implied volatility, it has jumped again as more uncertainties loom in the near future.



China is tightening its fiscal policy to cool the housing market and prevent a bubble, this will in the long-run cool down the Chinese stock market, but my trade is very near-term and this doesn't effect me much - although its not completely irrelevant.

Note worth is also how Jim Cramer is pushing BIDU at these levels. He obviously knows of the impact he has on the retail investors and with the 10-for-1 split in BIDU stock coming up on May 12th, he is looking to push this on retail investors and now it looks cheaper to own the stock.

A stock split doesn't change anything about the underlying, it just divides the current BIDU pie into more slices. BUT the majority of the time, a split has a rallying effect on the stock right after the split, this may push up the stock closer to my short call strike price of $800... which will be $80/share after split!!!

I'm watching this stock closely and following it day by day.

More posts to come.