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JD.COM INC

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013C trade ideas

Options Trading Series (LEAPS – BABA + JD) BABA and JD are two of China's largest and fastest growing e-commerce companies. Due to trade war fears, Chinese stocks have been under heavy selling pressure lately. BABA is down ~20% from its ATH and JD is down ~40%. On the other hand, both companies are producing outstanding financial results and investing in the future (i.e. Google + WMT announced partnerships with JD; and SBUX + KO announced partnerships with BABA). In terms of growth, just as an example, BABA's revenue in the March quarter grew 61% YoY; cloud computing revenue grew 103%. JD’s revenue grew by 33% YoY; active customer accounts were up 28% YoY, etc. It's not easy to find companies of this size growing at such an impressive speed. Obviously BABA is a standout, but JD is actually differentiated in many ways – most importantly are the quality of products on the website and the buildout of the logistic network; I think JD wins there (JD, over BABA, is often compared to AMZN in the early days – I think JD is far ahead than where AMZN was at this stage of being a public company). Technical perspective: both names are very oversold. BABA – as you can see shares have traded sideways for about a year: ~$163-$165 has severed as a floor of support. The last time RSI touched 30 was in Dec-17. Shares ran up from $165 and hit $205 before selling off (24% move). I think the stock is set up nicely for another run-up. JD - this stock has been a bit of a rollercoaster, hitting at a high of $50 with $35 serving as a floor of support -- which has just broken. The last time RSI hit ~25 was back in April 2018 when shares went from ~$35 to $45 before reversing course (28% move). While I do think there's more risk to this name, I think this stock is also nicely set up for a rebound. Given the level of risk I see with these China names and not knowing how long the trade war fears will play out / uncertain to the extent of the impact at this point, I decided to do LEAPs in both names. What I will do is trade shorter dated options (both calls/puts) around these “core” positions. Action: This morning I open both trades: JD - 1/17/2020 $37 Calls (JD reports tomorrow morning). BABA – 6/21/19 $180 Calls. (reports next week). I think trade war fears are overblown and these company very well-positioned for the future. I'd be a buyer here and on any future weakness. I will post update periodically. Cheers!
NASDAQ:JDLong
by VisionCodeX
4
JD.com - The sky is not fallingThe image of several charts related to China's companies has turned quite ugly lately. I was reading some articles concerning China, JD.com and looking also at Investors' comments as to several China stocks. Although equity markets became cloudy lately, looking at JD.com I do not see the sky falling. According to my calculations we had the first phase of uptrend (in 5 Waves) and we are now at the final stages of the move down (in 3 Waves). As soon as C ends - we are not far away from that level - I believe that JD.com will start a new and very important phase of uptrend. I have as target $60+ for this phase, then a 4th down and a 5th phase up which will be higher (I did not have enough space to place it). But for now let's focus at the end of II with the C and then there will be time to discuss the $60+ target. The C will most probably end just above or at the yellow rectangle. Once there is confirmation of the new phase up, I will update the analysis. What to do: the simple way is to gradually accumulate stocks of JD.com, a really excellent company. Now that there is fear for China stocks, the period seems interesting. Another possibility that I am thinking, is to start picking as of today some Call options Val. Dec 2018, Strike price $33 ($2.30 at this moment) be “Fearful when others are greedy and greedy when others are fearful.” as the Great WB once said.
NASDAQ:JDLong
by winstox
17