Just a month after bullish bets on Tencent Holdings Ltd. (700) climbed to a record, options traders are reversing their wager as Alibaba Group Holding Ltd. prepares for what will probably be the biggest-ever U.S. listing.
Tencent, a Chinese provider of instant-messaging services and games, is set to be dethroned as Asia?s largest Internet company once Alibaba completes its initial public offering this week. For the first time in five months, one-month puts that profit if Tencent shares fall 10 percent cost more than calls. Traders paid 11.7 points more for the bullish options as recently as Aug. 15, the widest premium on record. The shares sank 7.6 percent as of yesterday from an Aug. 5 all-time high.
?With Alibaba?s IPO in the pipeline there may be some dilution of interest in Tencent in the near term,? Ben Kwong, a director at KGI Asia Ltd., said on Sept. 10. ?There may be some switching because there?s another choice; if you have a more handsome boy coming then of course you might give up your old boyfriend and have a date with the new one.?
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