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China’s Stimulus Creates Huge Bullish Option Trades

China recently announced changes to their monetary policy, including mortgage rate adjustments and other stimuli which has since created strong flows into Chinese stocks.

What is notable to me as the head of the Benzinga Option School is how the inflows being driven aren’t primarily short term (i.e. expiring this Friday). In fact, the lions share of flows are further out in time, which tells me that a) this isn’t purely short-term speculatory flows, and b) traders are willing to hold risk over time in Chinese stocks.

Of note in this group is $BABA which is enjoying strong equity inflows today (29M shares today vs 19.9M which is the 30 day average). Hence, real money macro players are willing to put on risk, and in good size in the Chinese tech stock.

On top of this, only 26% of the call deltas on the day are expiring this Friday.

This means the options market isn’t dominated by short term players, but option traders willing to hold long calls over time.

Here’s how my PFP system tells me we can take advantage of this.

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