PDD $100 and $95 Options Fly Following Earnings Upset

"We are facing increasingly fierce competition. Competition has arrived and is expected to intensify in our industry," Co-CEO Chen Lei said on the Monday earnings call with analysts after the results. "As shown by this quarter's results, high revenue growth is unsustainable, and a downward trend in profitability is inevitable. Finally, I believe the environment will evolve, and our company will continue to grow."

The firm missed posting a Q2 revenue of 97.1 billion yuan ($13.6 billion), below the average estimate of 100 billion yuan, and a net income of 32 billion yuan, surpassing the projected 27.5 billion yuan.

Traders swapped 308k contracts, and a couple stood out for their high volume. The $100 Call contract expiring Friday saw the most volume, at 23k changing hands Tuesday. The contract gives holders the right to buy PDD at $100 a share for the price of 0.78C/share for 100 shares. The contract has fallen 71% in value after the underlying fall.

Another contract, a $95 Put expiring Friday, saw 21k in contract volume, which is one of the most. The contract gives users the right to sell PDD at $95, for the price of $1.05/share for a 100 shares. The contract value has fallen substatially in the past couple of sessions, though still up 800% from last week.