BaiDao Options Recap | PDD Holdings Post-Earnings Put, Micron's 'Presidential Endorsement' Call—Do Opposite Bets Lead to the Same Profit?

Hello, fellow investors, and welcome to this week’s 'Option Deep Dive Recap.'

This week’s two underlying assets—one bearish, one bullish; one Chinese concept stock, one U.S. semiconductor stock—moved in completely opposite directions, yet both delivered explosive gains. That’s the allure of options:You can profit whether the market rises or falls—the key is having the right directional call.

Today, we’ll recap these two trades to see how the profits were made and where the risks were hidden.

$PDD Holdings (PDD.US)$ : Earnings missed market expectations—put option gained tenfold in two days

PDD Holdings released its Q1 earnings before the U.S. market open on May 27. The market was unimpressed by these results:

Revenue came in at RMB 106.2 billion, up 11% year-over-year but below consensus estimates; Non-GAAP net income was RMB 14.1 billion, down 17% year-over-year and significantly short of market expectations.

On May 27, the stock gapped lower at the open and closed down more than 10%. On May 28, PDD Holdings shares fell further, dropping another 4%+.

Beyond fundamentals themselves, many fellow investors have likely felt acutely that Chinese concept stocks have long operated in a valuation environment of 'guilty until proven innocent'—good news lifts the price for a day, while bad news drags it down for three.

(The design images displayed on the screen are for demonstration purposes only and do not constitute any investment advice or guarantee; market movements are frequent, and the option prices shown do not represent actual conditions. The filtering criterion is options with an initial price below $3 per unit.)

This put option was trading around $1 on Tuesday, dipping as low as $0.62, meaning the entry cost was roughly $100. As PDD Holdings declined for two consecutive days, this put has gained more than tenfold from its lowest point.

There’s a magnification effect here:As PDD Holdings kept falling, the $90-strike put shifted from 'out-of-the-money' (when the underlying stock trades above $90, the put has no intrinsic value) to 'in-the-money' (once the stock drops below $90, the put gains tangible exercise value).This transition—from being worthless to having real value—is precisely what fuels the explosive potential of this put option.

Many options novices only know about 'buying calls to go long,' but puts represent the other half of the options world.Buying a put means you expect the stock price to fall—it’s essentially a 'low-cost short position.' Unlike short selling via margin lending (which requires borrowing shares and carries unlimited loss risk), the maximum loss when buying a put is limited to the premium you paid—for example, $1–$2 in this case. If your call is right, returns can multiply several times over; if wrong, you lose only that small amount.

While this put’s surge looks impressive, consider the flip side: if PDD Holdings’ earnings beat expectations or even just meet them, this put could rapidly expire worthless. Earnings-driven options trades are essentially binary bets—and they’re further impacted by rising volatility ahead of the earnings release.It’s best not to allocate a large portion of your capital to directional bets on a single earnings announcement.

$Micron Technology (MU.US)$ : Endorsed personally by the president, the memory chip leader soars

Micron’s story this week epitomizes the perfect convergence of timing, favorable conditions, and strong fundamentals:

Thursday, May 22: At a rally in New York, former President Trump publicly singled out Micron, praising it as "really great." Hours before this news broke, the options market had already seen several large bullish buy orders.

Tuesday, May 27: On the first trading day after the holiday, Micron surged nearly 20%, with its market capitalization surpassing $1 trillion for the first time.

At Thursday’s close, May 29: MU closed at $923

The underlying logic goes far beyond a simple presidential endorsement: Micron’s HBM (High Bandwidth Memory) capacity for 2026 has already been fully committed under binding contracts. The AI-driven memory supercycle, combined with continuously surging DRAM/NAND prices, has created a supply-demand imbalance in the memory chip industry with no near-term inflection point in sight. The presidential endorsement was merely the match that lit the fire—the kindling had long been laid.

At the start of the week, our exact words regarding opportunity were:

"If the stock gaps up more than 5% at today’s open, exercise extreme caution chasing it—it may already be the tail end of the initial reaction. The ideal entry scenario would be a modest 1%–2% gap-up at the open, followed by sustained strength throughout the session."

What actually happened? On Tuesday, it gapped up nearly 10% right at the open and kept climbing during the session, closing up almost 20% for the day.We expected something like 'a few percentage points up would be about right,' but reality hit us hard—far more aggressively than we imagined.

(The design images shown on screen are for illustrative purposes only and do not constitute any investment advice or guarantee; market conditions change rapidly, and the option prices depicted do not reflect real-time data. The selection criterion was options with an initial price around USD 3.)

As we can see, once the direction is right, the leverage offered by options can deliver a far more dramatic return compared to the underlying stock's gain.

But yesterday’s -18.78% drop is also a reminder to you:：When the underlying stock pulled back slightly from its peak, this call option dropped by nearly 20%.This call option, like the put option mentioned above, expires today. If you’re still holding this call, the strategy for today is simple: at the open, assess the direction—if you can exit, do so immediately; don’t gamble on the final moments.

Summary

This week’s two trading targets may seem completely unrelated—one involves a Chinese e-commerce stock dropping on earnings news, the other a U.S. semiconductor stock boosted by presidential endorsement. One is a short play, the other a long. Yet they share a common underlying logic:

Using limited capital (tens to hundreds of dollars) to bet on a clear catalyst event in pursuit of asymmetric returns.

A word of advice to fellow investors: successful options trading isn’t about being right every time—it’s about making enough when you’re right and losing little when you’re wrong.Your mindset and position management are what truly determine your long-term returns.

Not comfortable with options basics? Study up before jumping in.

If, while reading this recap, you're still unclear about concepts like 'What is a Long Call?' or 'How to interpret strike prices,' don't rush to place orders—take some time first to solidify your foundational knowledge.Here’s a curated list of practical beginner resources—recommended for bookmarking:

Long Call Buy Call Option

Long Put - Buy Put Option

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Disclaimer

This content does not constitute any offer, solicitation, recommendation, opinion, or any guarantee of any securities, financial products, or instruments. The risk of loss in trading options can be substantial. In some cases, your losses may exceed the initial margin deposited. Even if you set contingent orders, such as stop-loss or limit orders, they may not necessarily prevent losses. Market conditions may cause these orders to be unexecuted. You might be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be responsible for any deficit in your account as a result. Therefore, before trading, you should study and understand options and carefully consider whether such trading is suitable for you based on your financial situation and investment objectives. If you trade options, you should be familiar with the procedures when exercising options and upon their expiration, as well as your rights and obligations when exercising options and at expiration.

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