Option Witch | PDD's Profitability Make Shares Attractive, Sell Puts for Income or Discounted Entry

PDD Holdings’ strong earnings and Temu’s aggressive U.S. push highlight its growth potential, but options activity tells the bigger story. With bullish call interest and favorable implied volatility, traders see limited downside risk. A put-selling strategy offers investors attractive income while positioning for long-term revaluation upside.

PDD's Profitability Make Shares Attractive

PDD Holdings reported better-than-expected earnings for its second quarter, despite headwinds in the company’s core business such as tariff headwinds and increasing competition in the Chinese e-commerce market. China and the U.S. agreed on a trade framework in June that lowered tariffs temporarily, and, in the long term, I also believe that the U.S. and China are going to resolve their trade differences in a mutually beneficial way. While PDD Holdings has seen slowing top line growth in the second quarter and some pressure on margins, I believe China will remain a key growth play for e-commerce investors. PDD Holdings is very attractively valued based off of earnings, and I continue to see revaluation potential for the firm's shares.

Temu Plots Aggressive US Comeback With 60% Price Cuts

PDD Holdings Inc.-owned platform Temu is charging back into the US market with deep discounts to regain ground against rival Shein Group Ltd after months of turmoil from Donald Trump’s tariff changes.

At least two dozen of Temu’s best-selling products have seen prices drop by 18% on average in early September compared with late April, when small parcels still enjoyed duty-free access to the US under the so-called “de minimis” tariff exemption. Some items have seen cuts as deep as 60%, according to Bloomberg's data.

PDD’s Open Interests Show Bullish Bets

Open interest for PDD expiring after Oct 17 showed highly bullish sentiment as Call open interest totaled at 645,653, while Puts stood at 271,240. Put-Call open interest ratio reached 0.42.

Source: Option Charts

The highest open interest was seen on $130 strike Call expiring September 26, 2025, with 72,880 unclosed contracts as of September. The $140 strike call option expiring Oct 17 also showed heavy bets with 43,942 unclosed contracts.

Source: Option Charts

Option Strategy: Sell OTM Put

The expected move for PDD options expiring on Oct 17, 2025 (38 days) (m) is ±$7.83 (6.25%), with a price range of $117.4 - $133.06. The expected move means that IV defines that the stock price has a low probability of dropping below $117, giving chances to sell put options below $117.

Source: Option Charts

Structure: Sell the $115 Put ( Oct 17, 2025 expiration)

$PDD 20251017 115.0 PUT$

Source: Tiger Trade App

• Max Profit: ~$129 (estimate)

• Max Loss: -$11,371

• Estimated Margin: $2,502