To The Moon

$Tencent Holdings (00700) $The financial report will be released on August 13, Beijing time. 2025Q2 is expected to achieve revenue of 178.874 billion yuan, a year-on-year increase of 11.02%; The expected earnings per share are 5.461 yuan, a year-on-year increase of 9.35%.

Tencent's main revenue and profits come from: games, advertising, financial technology. The current video account and AI efficiency improvement are the key points of the market's attention. The current market's expectations for Tencent are not high, so whether this financial report can exceed the profit growth Expectations will be an important support to determine Tencent's future valuation.

From public information, we can find that evergreen games such as "Honor of Kings" and "Peace Elite" still rank among the best in the best-selling game list with the help of continuous gameplay innovation and commercial exploration.

And "Operation Delta" has become a new hit game, contributing significantly to performance growth. Its turnover is expected to gradually rise, effectively hedging the pressure brought by Tencent Games' higher base in the same period last year.

After the launch of the night battle mode on April 17th and the linkage skin update on April 29th, Delta Action continued to occupy a high position in the best-selling list of games. According to Questmobile data, the number of monthly active users (MAU) of the game reached 38.63 million in June 2025, ranking fourth among mobile game apps.

For investors, the follow-up product lines worthy of attention include the console version of "Delta Operation", "Under the Alien", "Fearless Contract" mobile games, "Honor of Kings: World", etc.

At the same time, it can be found in the 2025 Q1 financial report that the deferred income in the company's current liabilities reached 122.9 billion yuan, an increase of 23% from the previous quarter. This significant growth trend provides strong support for business growth in subsequent quarters.

In view of the upcoming Tencent financial report, investors can use the wide straddle strategy to trade.

What is the wide straddle strategy

In long wide straddle options, investors buy both out-of-the-money call options and out-of-the-money put options. The strike price of a call option is higher than the current market price of the underlying asset, while the strike price of a put option is lower than the market price of the underlying asset. This strategy has significant profit potential because the call option theoretically has unlimited upside if the price of the underlying asset rises, while the put option can make a profit if the price of the underlying asset falls. The risk of the trade is limited to the premium paid for these two options.

An investor shorting a wide straddle sells an out-of-the-money put and an out-of-the-money call at the same time. This approach is a neutral strategy with limited profit potential. Shorting a straddle option is profitable when the underlying stock price is trading within a narrow range between break-even points. The maximum profit is equal to the premium obtained by selling two options minus the transaction cost.

Tencent's short-selling wide straddle strategy case

Tencent is currently trading at HK $557.5. Investors can implement the short wide straddle strategy by:

Sell a call option with an exercise price of HK $580, and premium is HK $255.

Sell a put option with an exercise price of HK $540, and premium is HK $222.

Strategy Building

• Sold HK $580 call option → Revenue HK $255

• Sold HK $540 put option → Revenue HK $222

• Total option premium income = 255 + 222 = HK $477

• Maximum profit = HK $477 (share price between HK $540 and HK $580 at maturity)

PROFIT AND LOSS ANALYSIS

Profitable area:

• When Tencent's stock price is between HK $540 and HK $580, neither option will be exercised, and investors can fully retain the premium of HK $477 as a profit. Loss area:

• When the stock price is higher than HK $580:

  • The call option is exercised, and the investor needs to sell the stock at HK $580, loss = (stock price-580) × HK $100-477 (premium income)

• When the share price is below HK $540:

  • The put option is exercised, and the investor needs to buy the stock at HK $540, loss = (540-stock price) × HK $100-477 (premium income)

Break-even point

• Above break-even point = 580 + 4.77 = 584.77 Hong Kong dollars

• Break-even point below = 540-4.77 = 535.23 Hong Kong dollars

• The stock price is between HK $535.23 and HK $584.77, and the strategy is profitable; Loss if it is out of range

Risk and reward

• The maximum profit is limited at HK $477; The maximum loss is theoretically unlimited (when the stock price rises and falls greatly)

• Suitable for a market environment where the stock price is expected to fluctuate in a range and volatility decreases

• When the volatility rises or the stock price changes significantly, the risk is greater. It is recommended to cooperate with protective options to hedge the risk