NetEase (NTES) notable late day trades on 8/22 sold 2000 January $80 puts to open for $5.60 with shares trading $81.50 after falling 12% on earnings. NTES has 9000 September $90 short puts in open interest, 1000 December $90 short puts and 500 December $85 short puts while also a buy of 200 March $70 calls and 1000 January $105 calls on 8/21.

NTES shares are down 11.7% YTD though have outperformed a lot of Chinese peers the last few years. NTES has AVWAP from the 2018 low near the $78 level as a more optimal dip buy.

NTES provides web portal services, online value added services such as audio content, education and smart devices, eCommerce and online games business. Inhouse developed games include Fantasy Westward Journey, Westward Journey Online, The Ghost, Onmyoji and others.

NTES now has a market cap of $51.2B and trades 10.3X Earnings, 10.2X FCF and 7.7X EBITDA with a 3% yield. Valuation is near a 10-year low across most metrics but NTES is in a negative revision cycle and needs a catalyst to energize investors. Where the Winds Meet is a key expected game launch in Q4. Macro issues in China, regulation concerns and more intense competition have weighed on shares. NTES received approval for Marvel Snap and Marvel Rivals, both being car game and hero shooter game respectively. They also mentioned that they are working on other new generation titles like FragPunk, a PC shooter game, and Hearthstone, which will be launched next month. Youdao achieved historic-high operating cash flow and significantly narrowed its operating loss as digital content services achieved healthy revenue growth, fueled by AI-powered products.

NTES is unlikely to move higher until it can show success with new games and return to hitting profit/growth targets but the valuation is extremely attractive making put sales like the ones seen an optimal strategy.