Implied Volatility Skew in BIDU Points to Bullish Trader Sentiment
source: market chameleon Bidu IV Skew
Baidu Inc. (BIDU) is showing signs of a potential bullish shift in both its stock performance and options market sentiment. Recent data suggests that traders are positioning for upside in the stock, with options skew and open interest levels signaling growing confidence in a rally.
Strong Relative Performance
source: Market Chameleon
Over the past three months, BIDU has outperformed the broader market, returning +8.4%, compared to the S&P 500’s -4.3%. The trend has continued over the past two weeks, with BIDU up +3% versus SPY’s +2.7%. This relative strength hints at a shift in investor sentiment, especially as BIDU has been in a longer-term downtrend.
Bullish Technical Crossover
source: Market Chameleon
Technically, BIDU is flashing a potential reversal signal. The 20-day moving average recently crossed above the intermediate-term price trend—a bullish crossover that often marks the early stages of a trend change. After months of pressure, this could be the inflection point bulls have been waiting for.
Option Skew Tilts Bullish
Option traders appear to be leaning heavily toward the upside. The implied volatility (IV) skew shows that 25-delta call options are trading at an 8.8% premium to equivalent puts. This upward-sloping skew suggests that the market is pricing in a greater probability of an explosive upside move than a dramatic drop.
Open Interest Supports Bullish Sentiment
source: Market Chameleon
Looking at open interest, the divergence between calls and puts is notable. Call open interest ranks in the 88th percentile, while put open interest is in the 48th percentile—a strong indicator of elevated bullish positioning relative to historical norms.
Much of this call interest is concentrated in out-of-the-money strikes ranging from $100 to $200, which implies that traders are targeting significant upside potential in the stock.
Macro Backdrop & Valuation
Amid rising tensions with the U.S. imposing new tariffs and concerns about a domestic slowdown, China’s tech sector—particularly its AI push—has been accelerating. Baidu’s role in AI development, especially following the buzz around DeepSeek’s R1 model, could position the company for growth just as investor interest is reigniting.
Despite the recent rally, BIDU is still down -6.1% over the past year, while the S&P 500 is up +11.6%. That disconnect may present a value opportunity, especially if momentum continues building.
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Originally Posted on March 25, 2025 – BIDU Option Skew Points to Bullish Call Buildup — Is a Trend Reversal Underway?
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