bidu 12152010 options So far today, the security has seen rough

Bearish Bets Abound as Baidu's Growth Forecast Falls FlatAndrea Kramer ([e-mail])

12/15/2010 2:20:30 PM

Search engine issue Baidu Inc. (BIDU) joined fellow China-based company Trina Solar (TSL) at the Reuters China Summit – however, comments from the former's execs weren't quite as upbeat as those from the latter.

More specifically, Haoyu Shen, Baidu's senior vice president of business operations, predicted softer top-line and bottom-line growth rates next year compared to a lucrative 2010. "We had a major re-acceleration this year," noted Shen, citing a robust Chinese economy, the firm's new keyword advertising system, and cooling off competition from Google (GOOG). "For these reasons, it most likely won't repeat itself next year."

As a result, the shares of BIDU have given up more than 3% at last check – prompting perked-up put activity on the stock. So far today, the security has seen roughly 57,000 puts change hands – more than tripling its expected daily volume of about 15,000 puts. Most popular have been the December 105 and January 100 puts, which have seen around 9,800 contracts and 5,000 contracts traded, respectively. What's more, the majority of the puts crossed the tape at the ask price, and intraday volume has exceeded open interest at both strikes, pointing to a fresh batch of bearish bets.

From a broader sentiment standpoint, though, skepticism is nothing new among the short-term options crowd. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.27 indicates that puts are more prevalent than calls among options slated to expire within three months. Furthermore, this ratio ranks in the 92nd percentile of its annual range, indicating that near-term options traders have been more pessimistically positioned toward BIDU just 8% of the time during the past year.

At last check, BIDU has surrendered 3.6 points to hover just shy of the $103 level

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