DailyPlay – Opening Trade (PDD) – March 27, 2025

PDD Bullish Opening Trade Signal

Investment Rationale

PDD Holdings Inc. (PDD) showcases strong technical momentum, robust fundamental growth, and exceptional performance relative to its peers, solidifying our bullish perspective on the stock. Despite persistent concerns over U.S. tariffs, China has begun easing its economic approach, shifting to a “moderately loose” monetary policy and implementing measures to stimulate growth. With PDD trading at a substantial discount compared to similar companies, it remains primed for significant upside potential.

According to PDD’s chart, the stock recently broke out above its key trading range with impressive momentum, though it has since experienced a slight pullback. It continues to outperform the broader S&P 500, suggesting sustained institutional support and relative strength. Provided PDD holds above its prior breakout level, our upside target of $145 remains intact, backed by compelling price action and fundamental resilience. Despite its superior growth metrics, PDD trades at a notable discount to its industry:  

• Forward P/E Ratio: 10.02x vs. Industry Median 22.47x  
• Expected EPS Growth: 30.21% vs. Industry Median 9.59%  
• Expected Revenue Growth: 31.26% vs. Industry Median 4.92%  
• Net Margins: 29.06% vs. Industry Median 9.95%  

These figures underscore PDD’s remarkable profitability and growth trajectory, reinforcing our conviction that the stock is undervalued.

To harness our bullish outlook while mitigating risk, we recommend selling the May 2, 2025, 120/110 put vertical spread for a $3.31 credit. This trade profits as long as PDD stays above $120 at expiration, offering a maximum reward of $331 per contract against a defined risk of $669. Despite the recent pullback, PDD’s breakout and strong fundamentals make this strategy an effective way to capitalize on its upward momentum while maintaining an attractive risk-reward balance.

PDD – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 3 Contracts PDD May 2 $120/$110 Put Vertical Spreads @ $3.31 Credit per Contract.

Total Risk: This trade has a max risk of $2,007 (3 Contracts x $669) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $669 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue higher off recent support.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 93

Stop Loss: @ $13.38 (100% loss to value of premium)

View PDD 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 Wednesday’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 PDD Trade