BIDU Earnings - Oct 27

Discussion in 'Options' started by ForexForex, Oct 26, 2011.

  1. Very Juicy

    BIDU Earnings Oct 27 one day before options expire, just the way I like it. I'm leaning towards Calls, a few strikes OTM in the $1.50 range to be bought on October 27, 2011 at about 3:45pm EST.

    I put the ELITE in Elitetrader :)
  2. i am thinking the risk reward is in buying puts :D

    Baidu: History Shows Investors Should Be Cautious Ahead Of 3Q11 Earnings

    Chinese Internet search bellwether Baidu (BIDU) will report 3Q11 earnings on October 27, after the market closes. Historical patterns suggest investors should be cautious on Baidu shares ahead of the 3Q11 earnings release.

    First, Baidu has reported Q3 earnings six times since its IPO. For two out of these six quarters, Baidu shares rose on the next trading day following Q3 earnings releases (green columns in Chart 1), representing a 33% "winning percentage." By comparison, for 16 out of Baidu's total 25 quarterly reports, Baidu shares rose on the trading day following the releases, representing a 64% winning percentage (Chart 1). Historically, Q3 has been Baidu's worst quarter in terms of next-day performance (Chart 1), with an average price change of -5.3% on the day following Q3 earnings releases.

    Second, Baidu has released quarterly revenue guidance six times since its IPO. For five out of these six quarters, Baidu's actual revenue beat the midpoint of guidance range (Chart 2), representing a 83% winning percentage. On average, Baidu has beat guidance midpoint by 3.9% historically. On average, Baidu has beat guidance midpoint by 5.3% in Q1 reports, 3.9% in Q2, 2.8% in Q3, and 3.8% in Q4. This shows Q3 has been the worst quarter in a year in terms of the magnitude of the beat (Table 1).

    These patterns show that statistically it has been a bad idea to buy Baidu shares ahead of Q3 earnings releases. My explanation for the patterns is: Due to seasonality, Q2 has been the strongest quarter in terms of Baidu's quarter-over-quarter revenue growth. Impressed by strong Q2 results, investors increased their expectations for Q3, the following quarter. Sometimes such increases were excessive, causing earnings disappointments. It is certainly possible for Baidu's 3Q11 results to surprise the market on the upside, like it did in 3Q10. However, statistically, it makes sense to take a cautious stance before Baidu reports 3Q11 earnings.
  4. john33


    151 in the after-hours, could easily go higher tomorrow though, who knows.
  5. stango98


    This is my first post so please be gentle. I have been lurking around reading off of all of your posts for about 3 months and gleaning information I thought was useful.

    I never hold through earnings (day trade almost exclusively) but I have seen so much hype on BIDU that I thought I would give it a shot. It may be a bad comparison but I watched GOOG and YHOO report better then expected so I thought BIDU might do the same (yes I realize it's a Chinese company). I was going to short NFLX before earnings but didn't have the cojones to do it.

    I got in for 1200 shares at $137.48 right before close today and sold it all off right after earnings announcement for an average of 150.45. Some people might have held on for tomorrow but I hate holding over night.

    I would like to say thanks to those of you who were so positive on the stock and swayed me in this direction.

    This is not meant to be a "look at me" post I just have had a rough patch in trading the last 2 weeks (down 18K). This was the first bright moment recently and recouped most of my losses so I am just happy. I enjoy reading post of people that do well so I thought I would share.

    :) :) :)
  6. Bravo... I take my hat off to you for "taking the shot."

    I had some good positions and even better ideas... but a few days ago I got out of some and spread short calls against others, not wanting to absorb any reversal or retracement. I will be doing a lot of soul searching over the weekend. I was going to get into BIDU for past 2 days but did not have the capital or cojones available to take the risk of bad news.
  7. Good prediction but option expired worthless, I got the direction right but timing off by one day. BIDU did get to about $150.00, $15.00 short of what I expected.

    I put the ELITE in Elitetrader :)