NEW BEARISH Plays
SINA Corp. - SINA - close: 35.16 change: -0.57
Stop Loss: 36.55
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on January -- at $---.--
Listed on January 15, 2015
Time Frame: Exit PRIOR to earnings in late February
Average Daily Volume = 1.4 million
New Positions: Yes, see below
Why We Like It:
China has the largest Internet audience on the planet. More than 641 million of their 1.357 billion people are online. In spite of these massive numbers Chinese Internet company SINA is having trouble making money.
SINA is part of the technology sector. They run a digital media network through SINA.com (their "portal") in addition to SINA mobile. They also control a majority stake in the Twitter-like microblog service Weibo.
Unfortunately for SINA shareholders the stock has collapsed. It's a long way from the all-time highs near $147 a share back in 2011. It's 2014 high was about $90. SINA was one of the market's worst performers last year with a -55% decline. That's likely because earnings have been so challenging. The last three earnings reports in a row have seen SINA guide lower. Revenues are falling and analysts are worried about margins.
The bearish trend of lower highs has pushed SINA toward key support near $35.00. A breakdown here could spark the next big leg lower.
It is worth noting that Chinese Internet stocks can be volatile. I would consider this a more aggressive, higher-risk trade.
Tonight we are suggesting a trigger for bearish positions at $34.70 with an initial stop loss at $36.55, above the 10-dma.
Trigger @ $34.70
- Suggested Positions -
Short SINA stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the MAR $35 PUT (SINA150320P35) current ask $2.29
Option Format: symbol-year-month-day-call-strike