Swing Trade Setup - 09/27/25
JD.com swing trade detailed - fundamental argumentation and trade execution.
I’ve always said that fundamentals, research & convictions matter, but beating the market comes down to execution. That’s what these write-ups will be about.
I will share through them every change in my active portfolio - stocks & options, reasonings & plans, before I even hit the buttons. I won’t update DCAs, I will only share my plans & new/closed positions in these write-ups. You can follow the rest directly on savvytrader.
https://savvytrader.com/wealthyreadingspro/active
I also recently opened a Buy & Hodl portfolio on which I will DCA $4,000 every month & focus on buying the best assets I can at the best possible price, 100% focused on fundamentals & valuation, without any active management.
https://savvytrader.com/wealthyreadingspro/buyandhodl
Keep in mind that both portfolios have completely different goals and I can behave very differently on both for the same name - accumulating in the buy & hodl while selling in the active portfolio for example. Different rules apply.
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The JD Trade.
I wanted to highlight a trade I didn’t take - yet, but am building a case on as it could be a really profitable trade for the next year. High chances I step in as even if I am being cautious on the market at the moment, most of my worries are in U.S. tech large and growth names, not undervalued Chinese stocks.
China & JD.com.
Before talking about JD itself, you guys know I am bullish on China and have been for the last two years. The market is finally seeing the potential and tons of liquidity went towards Chinese equities. Some of them at least, namely Alibaba, Tencent and Baidu for the ones I follow, and some more but the focus is clear: tech.
And I believe inflows will continue as returns attract liquidity, which is why I hold both my Alibaba and KWEB positions and will accumulate them on opportunities. When a bull market unfolds, the leaders move first and drag the rest of the pack with them. I do not consider Baidu a leader, yet its stock is pushed higher by both Alibaba and Tencent which clearly are leaders.
Which brings us to JD.com, one of the biggest Chinese e-com platform, with 20% plus market share locally and a rapid growth. The company has a pretty classic business in China with a retail e-com, some B2B revenues, its own logistics network, a healthcare platform and some smaller bets like delivery or tech services… As usual in China, many businesses with synergy between each and a large focus on e-com which represents 90% of total revenues. But JD is also present and involved in the AI revolution with JD Cloud, which could turn the narrative were they to push it - doesn’t seem to be their intention so far though.
Social media made the case for more than a year that JD.com is one of the most undervalued companies on the market with accelerating growth and more than $16B of cash aside while trading at less than 1x sales.
You guys know that my bull case relies mostly on AI and tech just like the U.S. but also through a growth in local consumption, logically bullish for e-coms. I already talked about the company on my China write-up and it is part of the KWEB ETFs so I am already exposed to it.
To sum up to here, we are talking about one of the biggest e-com player in China with a focus on retail and a light involvement in the AI revolution, which fits perfectly my bull case and trades at less than 1x sales while growing rapidly and seeing comparable stocks yielding large returns. And once again, returns attract liquidity and when/if the Alibaba/Tencent/Baidu trade becomes crowded, liquidity will look for alternatives.
JD.com seems to be a logical candidate.
Liquidity and Technicals.
There are more reasons for me to bring this name up today, the main one being that the order flow is showing strong activity on the recently, with 122,750 call contracts with a weighted average strike price at $40.92 for May-26 and 15,700 sold puts at a weighted average of $29.54 for July-26. All of those were bought this month only.
Lots of bullish activity largely out of the money as JD is trading at $34 at Friday’s close.
Price action is also very encouraging despite the last six months being clearly sluggish, the stock has now reclaimed its weekly short term EMAs and seems to be holding them this week, even bouncing on them.
Impossible to know how the next weeks and a potential breather on U.S. equities will impact the name but at today’s valuation and with the actual bull trend on Chinese equities, I do not think this stock to be the most risky one in the market.
The Playbook.
From there, there are lots of ways to play that trade. Simple buy and hold strategy for anyone bullish in China, option calls as the premiums remain reasonable, sold puts for those who want to yield safer returns… I would be more aggressive on such a name with a reversal trend, but that’s just me.
My plan would be to sell puts and use the credit to buy calls based on the order flow’s averages shared above. Big money is betting on those, I wouldn’t ignore them.
I would sell Sep’26 $30 puts for $3.60 to buy Jun’26 $42 at $3.30 hence a $0.3 credit per contract. This is a pretty long trade as it spans over a year and would lock $3,000 per contract if you want to cover the puts, with the obligation to buy JD at $29.7 per share if the stock were to trade below that price by September 2026, well below its actual bottom.
The maximum risk for this trade is to be forced to buy those JD shares at a really good price - even more depressed than today, which isn’t much of an issue in my opinion assuming the company won’t bankrupt during this time and go to $0. It would remain a winning trade as long as JD trades above $30 by September and upside returns are large as you would be paid to take the trade and “only” lock $3,000 per contract, less using margin, depending on how you manage your account. Keeping in mind that big liquidity is betting on the stock trading above $40 by May-26 and analysts agree.
The quotes are from Friday’s close and might differ Monday hence require adaptation if you want to build this trade or a comparable one. This at least explains the concept, although once again there are plenty of ways to play this trade, more aggressively - only buying calls, and safer ones - not taking it at all.
There are risks for JD.com, some geopolitical ones although the company is focused locally - a plus to my opinion as I am bullish on Chinese consumption, some due to its fundamentals are we are talking about an e-com play “only” without much ties to tech which means maybe less flashy for investors, and more. But its valuation combined with the order flow bullishness seems to point north although as usual, there are no certitudes in the market, only risk management.
This is only my idea, a pretty good risk/reward in my opinion considering the state of Chinese equities, the fundamentals and potential of JD.com and its actual valuation, it could be worth it. There are hundreds of setups for this trade, the bottom line being that it could really be a great trade as the world wakes up to Chinese stocks.