Editor's Note:
This tech name is a popular one with the momentum traders. Shares appear to be starting their next leg higher.

- James


NEW DIRECTIONAL CALL PLAYS

Baidu, Inc. - BIDU - close: 114.10 change: +2.41

Stop Loss: 107.45
Target(s): 119.75, 124.50
Current Option Gain/Loss: +00.00%
Time Frame: 4 to 5 weeks
New Positions: Yes

Company Description:
Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving individual Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs currently trade on the NASDAQ Global Select Market under the symbol "BIDU". Each of Baidu's Class A ordinary shares is represented by 10 ADSs. (source: company press release or website)

Why We Like It:
BIDU has been an incredible momentum play and shares continue to lead higher. You'll notice that BIDU has developed a pattern of consolidate sideways for a couple of weeks and then breakout higher. Shares just broke out again today. I'm suggesting bullish call positions now. Patient traders could wait for a dip back toward $112 or even $110 before launching positions. This is an aggressive, higher-risk trade given BIDU's volatility. I strongly suggest you consider smaller positions to limit your risk. We'll use a stop loss at $107.45. Our first target is $119.75. Our second target is $124.75.

Suggested Position: Buy the 2010 December $120 calls (BIDU1018L120) current ask $3.35
- or -
Buy the 2011 January $120 calls (BIDU1122A120) current ask $6.05

Annotated Chart:

Entry on November 12th at $ xx.xx
Earnings Date 02/09/11
Average Daily Volume = 13 million
Listed on November 11th, 2010