To The Moon

Netease will release its financial report before the market opens on August 14th, Eastern Time, so investors should stay tuned.

The organization expects NetEase to achieve revenue of 28.577 billion yuan in 2025Q2, a year-on-year increase of 12.13%; The expected earnings per share are 13.817 yuan, a year-on-year increase of 32.6%. The accounting standard used for the above data is US-GAAP.

After attending the 2025 China International Digital Interactive Entertainment Exhibition held in Shanghai, Citi analysts said that the enthusiasm of the latest game show hints that China's game industry will continue to recover. These analysts said that with the normalization of the regulatory environment, the stabilization of the competitive landscape and the improvement of the quality of game content, this year's exhibition has more traffic and higher player enthusiasm than last year. NetEase's highlight of new games, including Sea of Oblivion and Destiny: Rise, could indicate that its release schedule will accelerate in the second half of the year, Citi said.

NetEase's stock price fluctuations after its earnings report

In the last 12 earnings quarters, the options market overestimated NetEase's (NTES) share price volatility after its earnings report 67% of the time. After the announcement of the earnings report, the average fluctuation range of the options market forecast is ± 6. 3%, while the actual average fluctuation range (absolute value) is 5.5%.

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 wide 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.

NetEase short-selling wide straddle strategy case

Stock NetEase is currently trading at $135. Investors can implement the short wide straddle strategy by:

Sell a call option with a strike price of $145, and premium is $70.

Sell a put option with a strike price of $125, and premium is $154.

• Stock Price: $135

• Sell call option: Strike price $145, premium $70

• Sell put: Strike $125, premium $154

• Each option contract represents 100 shares

Maximum benefit:

• The maximum gain is the total premium received, based on 100 shares:

  • Maximum gain = (70 + 154) × 1 = $224

Break-even point:

Total premium/share = (70 + 154) ÷ 100 = $2.24

Above breakeven point (bullish end):

145 + 2.24 = $147.24

Break-even point below (bearish end):

125-2.24 = $122.76

Summary:

• Maximum gain: $224

• Break-even point:

  Above: $147.24

  Below: $122.76

  If the stock price exceeds $147.24 or falls below $122.76, the strategy will start losing money.