To The Moon

Pinduoduo experienced a sharp drop in stock price yesterday. To confirm the extent of its impact, I reviewed the options activity for the KWEB and FXI ETFs. On March 23rd, I noticed that a trader placed a very aggressive order:

• buy $KWEB 20230421 34.5 CALL$

The total transaction amount for the call option is over 1.9 million. It has an expiration date of April 21 and a strike price of 34.5 OTM. There is a high likelihood that there will be a surge in the near future, or the price will rise to 34.5 before April 21.

Similarly, there is an option move on FXI, where traders are making a call spread, which is not so aggressive:

• buy $FXI 20230519 30.0 CALL$​
• sell $FXI 20230519 35.0 CALL$

The total transaction amount for the call option is over 2.8 million. It has an expiration date of May 19 and a strike price of 30 OTM. The strike price on the sell side seems to be a weak hedge and appears to be more of a margin reduction than a strong hedging strategy.I was puzzled when I saw these two big orders for China-related stocks, especially since the orders were placed after the FOMC meeting. While Europe may be considered riskier than the U.S. in terms of investment opportunities, I'm unsure about the logic behind foreign inflows into China-related stocks. Wouldn't Microsoft, for example, be a more secure investment option for large-scale investments?

If KWEB & FXI are strongly bullish, there's no reason for PDD to remain bearish.

However, it's possible that institutions placing orders after the FOMC are using it as cover, rather than basing trading logic on the event itself. Despite the intermediate volatility causing the option price to fall, good news could still lead to a boom.

The two large orders for Alibaba suggest further government support for the enterprise.

It's unclear whether institutions will wait patiently for the strike price to be reached tonight, or take advantage of a surge to sell directly and make a profit. Please find this information for your reference.