DailyPlay – Portfolio Review & Opening Trade (BIDU) – March 17, 2025

DailyPlay Portfolio Review

Our Trades

AMGN – 39 DTE

Bullish Credit Spread – Amgen Inc – This position was established recently and is slightly profitable. We plan to hold steady for now.

BABA – 60 DTE

Bullish Debit Spread – Alibaba Group Holding Ltd – This position was established recently and is currently profitable. We plan to hold steady for now.

CME – 31 DTE

Bullish Credit Spread – CME Group Inc  – We have a solid gain in this position and might close it out soon to capture the profit.

GLD – 18 DTE

Bullish Credit Spread – SPDR Gold Trust  – The bullish trend in gold is gathering force once more. The position remains profitable, and we will hold steady for now.

KMI – 18 DTE

Bearish Long Put – Kinder Morgan Inc – Since establishing this position, we have a small loss, and with expiration approaching, the position will be under close watch.

SHOP – 39 DTE

Bullish Credit Spread – Shopify Inc – This position was recently established, and we are slightly down. We plan to hold steady for now.

BIDU Bullish Opening Trade Signal

Investment Rationale

As a trade war with China escalates, Baidu Inc. (BIDU) stands out as an opportunity to gain exposure to a global leader in AI at a compelling valuation, with reduced risks from tariffs. As China’s leading search engine, BIDU has evolved into a powerhouse in AI innovation, with initiatives like the Ernie Bot chatbot, Baidu AI Cloud, and autonomous driving projects gaining significant traction. These efforts position BIDU to capitalize on China’s aggressive push to compete globally in AI, supported by recent deregulation that is unlocking value for Chinese tech firms. Trading at a significant discount to its industry, BIDU offers an attractive risk to reward for investors seeking exposure to the AI revolution with a long-term growth horizon.

If we examine the chart, BIDU made a new 52-week low at the beginning of 2025 which started to show exhaustion from sellers. Since then, the stock has made a series of higher highs and higher lows, suggesting that the multi-year downtrend is potentially starting to reverse in the other direction. Lastly, the recent pullback and bounce off its $84 confirms this directional shift with an upside target of $150.

Looking at the business, BIDU trades at a significant discount to its industry, despite EPS growth and profitability metrics that are in line with or exceed industry averages. China’s deregulatory push and BIDU’s leadership in AI further enhance its investment case.

• Forward PE Ratio: 9.1x vs. Industry Average 20.9x
• Expected EPS Growth: 13% vs. Industry Average 14%
• Net Margins: 18% vs. Industry Average 8%

BIDU’s AI Leadership:

• AI Leadership: BIDU’s AI initiatives, including the Ernie Bot 4.5 and Ernie X1 leading frontier models that compete with ChatGPT. 
• Deregulatory Tailwinds: China’s recent relaxation of tech regulations is unlocking value for BIDU, allowing it to focus on innovation and growth.
• Investment in AI Ecosystem: BIDU’s $145M venture capital fund for AI startups and up to $2B investment in biotech highlights its commitment to expanding its AI and tech footprint.

BIDU – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 5 Contracts BIDU May 2 $94/$87 Put Vertical Spreads @ $2.96 Credit per Contract.

Total Risk: This trade has a max risk of $2,020 (5 Contracts x $404) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $404 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on an stock that is expected to continue higher over the duration of this trade.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 94

Stop Loss: @ $5.92 (100% loss to value of premium)

View BIDU Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Friday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View BIDU Trade