JD.com Stock Hits New High on IPO Report

Weekly call traders could be playing today's rally

JD.Com Inc (NASDAQ:JD) is up 3.8% this morning at $36.65, thanks to a Reuters report indicating the company is exploring an overseas initial public offering (IPO) for its logistics business. According to the article, the IPO could raise between $8 billion to $10 billion -- which equates to roughly one-fifth of JD's market cap -- and the proceeds could go toward expanding warehouses or acquisitions.

This price action has JD shares exploring fresh highs, with this morning's early peak of $36.80 marking the highest point reached since August 2018. The shares in November broke above the formerly resistant $32 level, which then acted as support, helping the Chinese e-commerce concern rise 15% in the past month -- though their 14-day Relative Strength Index (RSI) was already in overbought territory before today at 71.

Calls have remained popular at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where the 10-day call/put volume ratio stands at 3.75. Calls are already hot this morning, with new positions opening at the weekly 12/27 37.50-strike call. Those buying the contract expect JD shares to keep rising through the close this Friday, when the weeklies expire.