On the Near-term and Longer-dated Pricing for Pinduoduo
$Pinduoduo (PDD)$'s 30% plunge drove it to be the 6th most actively traded options name across the entire U.S. market.
Call option volume grew 28.9% while put volume increased 8.8%.
The heavy trading reshaped the leaderboard for active strikes. This week's most traded call strikes were 160, 150, and 110. For puts, it was 90, 95, and 99.
PDD's expected trading range for the week has narrowed to $90-110.
The most active strikes saw a mix of institutional and retail positioning:
For calls, the $PDD 20240830 110.0 CALL$ expiring this week was dominated by retail traders with no notable block trades.
However, the $PDD 20240913 110.0 CALL$ for September 13th expiration saw institutional buy-side flow around 2:30pm ET, after the stock found support following the morning plunge.
There was also a large institutional seller of the September 13th 90 calls around 11am ET.
Put trading was active intraday, with the weekly 90 puts seeing buyer focus in the morning followed by seller focus in the afternoon.
The more ominous 60 and 70 put strikes were driven by volatility-selling and delta-hedging flows as discussed yesterday.
Summarizing near-dated pricing:
Monday's flows focused on weekly options, with calls and puts centered around the $90-110 range.
For longer-dated pricing:
Excluding this week, calls for September are anchored to 110.
Puts into October are priced off 90, with "panic" levels at 80.
But by November, put strikes rise back to 110.
So there is a disconnect in longer-term pricing - $90 seems the near-term floor, with $80 representing a more bearish capitulation target. But the market is giving PDD more breathing room further out in time.
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