(Bloomberg) -- Expectations are running high for Tencent Holdings Ltd. when it reports earnings Wednesday after optimism over its video game business helped push the stock to a two-year peak.
The trading volume of call options, which are bets on gains in the share price, jumped to nearly 120,000 on Monday, more than three times the 20-day average. A measure of bearish wagers relative to bullish ones is at the lowest in more than a year. The 6.3% implied move by the stock on Thursday morning would be the biggest since August 2015.
Tencent is expected to report an 18% increase in first-quarter revenue, down from 20%-plus in previous periods but still decent given the virus outbreak. Investors have pushed the stock price up on bets its game business will benefit from people with extra free time at home during the pandemic, and from its growing cloud and finance services. However, analysts warn the company will soon be contending with increased competition from the likes of Alibaba Group Holding Ltd. and ByteDance Ltd.
Here are four charts showing what traders are looking at ahead of Tencent's results.
Options Market
The put-to-call ratio for the stock is at the lowest level since 2018, according to Bloomberg-compiled data, suggesting investors see less need for hedging against downside.
Analysts Ratings
Tencent is still the most-loved stock in Hong Kong, with none of the 56 analysts that cover it recommending selling. While the stock has narrowed the gap with the average price target, it hasn't hit that level in two years.
Price Comparison
Investors have been willing to pay a much higher premium for Tencent shares than for Alibaba's. Tencent has rallied 15% in Hong Kong this year, compared to Alibaba's 3.2% drop in the U.S.
Mainland Investors
Investors in mainland China have been snapping up Tencent's shares via the trading links since last year, pushing their ownership level to the highest on record, according to data compiled by Bloomberg.
©2020 Bloomberg L.P.
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