Stream Your Way To Success

call options

The US streaming companies like Netflix (NFLX), Disney (DIS), and Amazon (AMZN) have struggled lately as investors are questioning if the streaming business model is financially sustainable. Companies are battling with subscriber growth saturation and figuring out how much subscribers are willing to pay. To keep up with content wars, streaming providers are competing to create content to keep people engaged.

If you ask people, most people tend to pay for 3 to 4 streaming services in order to get all the channels and shows they want to watch. Many of the cord-cutters canceled pay-TV because of the cost, but now are facing rising costs. If only there was a service that had all the channels in one place for one cost… Wait, that was cable.

However, the US isn’t the only country in the streaming game and there’s one company that posted its first quarterly net income since its 2018 listing, after carrying out aggressive cost control measures.

This information services company is involved in everything from streaming to cloud computing and autonomous driving. The stock has been on the rise over the six months even though the rest of the US market has been in a free-fall.

Baidu, Inc (BIDU) offers internet search services in China, and similar to Alphabet’s (GOOGL) search engine dominance in the US, BIDU currently has an 84% market share of the Chinese search engine market. BIDU also operates the iQIYI streaming service as well as Haokan, a short video app. For simplicity’s sake, they are very similar to Alphabet in terms of just how many different segments they are involved in.

As their search engine and online advertising revenue came under pressure from competitors, BIDU committed to pivoting away from its core online marketing business to reinvent itself as a supplier of deep tech, by expanding into self-driving systems, cloud computing, and semiconductor chips.

BIDU is looking to launch a fully driverless ride-hailing platform in China by 2023 after receiving a testing license from regulators in April. They plan to expand the service to 100 cities by 2030.

Despite the lockdowns in China, BIDU has managed to increase sales year-over-year (ok, I’m giving them a pass for 2020).

call options

We’ve also been looking at low beta stocks for the last six months and BIDU fits with a beta of 0.80.

With recent bank upgrades and revised price targets in the $200 range, I’d like to see the stock break through the $155 level before looking for it to go further.

call options

Here’s a potential trade idea using call options.

Bull Call Spread
Symbol: BIDU
Buy to Open -> 2022 Aug 19 $160.00 Call
Sell to Open -> 2022 Aug 19 $170.00 Call
Debit to place a trade: $358 per spread
Short-Term Target of Underlying: $165
P/L of Spreat at Price Target: $107.16
ROI: 30%
Risk Graph (CP = Current Price):

call options

The stock needs to be higher than $163 at the time of expiration for the spread to expire with value, however, if the underlying keeps going up in a short period of time, the option spread will gain value, even if it continues to be out of the money.

You can move the strikes to be further in the money if you’re worried about trading out-of-the-money spreads, but the further you go in the money, the more the upfront debit will be.

-Jeff

If you have any questions, comments, or anything we can help with, reach us at any time.
Email: [email protected]
Phone: (866) 257-3008

 

Jeff

Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society

Can Clean Energy Renew Your Portfolio?

Can Clean Energy Renew Your Portfolio?

johnh
On August 8, 2022

As we look for trade ideas, the U.S. government just handed over a potential big win for one industry. Will we see a boost to the clean energy stocks after the Senate voted to unlock nearly $370 billion this past weekend?

Will Payrolls Push The Fed To Take Action?

Will Payrolls Push The Fed To Take Action?

johnh
On August 7, 2022

What does all of this mean for the future? Are the jobs reports good or bad?

Keep reading to find out the key levels for the S&P 500 and what reports are likely to move the markets this week.

Job Market Remains Tight As Jobless Claims Increase

Job Market Remains Tight As Jobless Claims Increase

johnh
On August 4, 2022

To close out the week I have a trade idea for you with a potential 44% return in the next 43 days.

Get Today’s Trade Idea (and more)

FOMO Hits Market After Strong Earnings

FOMO Hits Market After Strong Earnings

johnh
On August 3, 2022

We could see another strong month ahead for tech and there’s one symbol that you may want to add to your trading list.

Keep reading to learn more about the one symbol that could have a strong August.

Consistent Income Using One Ticker

Consistent Income Using One Ticker

johnh
On August 2, 2022

As the markets remain relatively flat, theta decay is your friend this week so I thought I’d write about a trade that has been showing remarkable accuracy lately.

This one trade has a 90% accuracy rate. Keep reading to find out more.

How Stable Is The Job Market?

How Stable Is The Job Market?

johnh
On August 1, 2022

It wasn’t too long ago that the market was reacting (or overreacting) to every piece of news that was published. Over the last month and a half, the markets have settled down some. That can be seen from the VIX (volatility index) which has been steadily decreasing since the mid-June market lows.

Don’t Call It A Recession

Don’t Call It A Recession

johnh
On July 31, 2022

That begs the question: if the market is forward-looking, why do we put so much attention to GDP numbers that are identified and then reported after the quarter is complete?

Is This Really A Recession?

Is This Really A Recession?

johnh
On July 28, 2022

The Mediots Are At It Again

As we’ve explained over the last few months, it was likely that the U.S. economy would meet the ‘technical’ definition of a recession (two or more consecutive quarters of negative GDP).

Three Dividend Stocks To Buy After Yesterday’s Fed Meeting

Three Dividend Stocks To Buy After Yesterday’s Fed Meeting

johnh
On July 27, 2022

It’s official, the Fed increased interest rates by 75 basis points for a second straight meeting. Inflation remains high, job growth is slowing, and consumer confidence is at historic lows.

Maybe that’s why investors are rushing toward dividend investing to protect their portfolios. With a recession likely on the horizon, if we’re not there already, and dividend payouts projected to increase throughout 2022, there are three quality companies you should consider for your portfolio.

Top CEOs Are Saying This About The Upcoming Quarter

Top CEOs Are Saying This About The Upcoming Quarter

johnh
On July 26, 2022

What can learn from the major companies that reported earnings?

Alphabet (GOOG/L) released earnings and missed overall, but their ad revenue beat expectations so their stock went up after hours. Microsoft (MSFT) missed on cloud revenue and ad revenue and their stock went down. Great.

PREV NEXT

Contact

267 Kentlands Blvd #225
Gaithersburg, MD 20878

P. (866) 257-3008
(Monday-Friday 9:00 AM-5:00 PM EST)

E. [email protected]

Products

About

Publisher of actionable and proven strategies and tactics to help investors build wealth and reach seven-figure portfolios.

Receive the latest news

Subscribe To Our Daily Newsletter

Get notified about new articles, special events, training, and much more

Like What You See?

Leave your info below to get more options and trading ideas to your inbox

Yes, send me news to my inbox.