China Stock Could Benefit from Seasonal Tailwinds

Pinduoduo stock, PDD stock, agriculture technology stocks

Options are affordable at the moment

Subscribers to Schaeffer’s Weekend Trader options recommendation service received this PDD commentary on Sunday night, along with a detailed options trade recommendation — including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

PDD Holdings Inc – ADR (NASDAQ:PDD) stock is seeing support from bullish quantified data as well as seasonal tailwinds, per Schaeffer’s Senior Quantitative Analyst Rocky White.

 

The security pulled back to its long-term 200-day moving average, and the past three times this occurred, the stock was higher one month later with an average 8.79% rise. Plus, PDD has seen positive returns in August 67% of the time since the stock’s inception, averaging a 15.8% return.
 
There is trading at the last large put strike, 130, which could be supportive moving forward. The shares are also seeing a 61.8% Fibonacci retracement from their April lows to May highs.

 

It’s also worth noting options are affordable, per the equity’s Schaeffer’s Volatility Index (SVI) of 35% which sits in the 15th percentile of its 12-month range. In simpler terms, option players are pricing in low volatility expectations at the moment.

 

Our recommended September call has a leverage ratio of 6.6 and will double on a 15% rise in the underlying security.

 

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