Baidu ($BIDU) reported a strong quarter on Thursday, and finally showed some momentum in the 020 initiatives they have spent so much money on. It was a report that changed my sentiment from neutral/bearish to bullish. That was until yesterday, when rumors started coming out that China regulators were launching an investigation into Baidu($BIDU) after the death of a student. You can read all about it (here).
Baidu($BIDU) relies heavily on the healthcare sector for quite a bit of their revenues. They do not provide a breakdown by sector, but some estimate it's upwards of 15-25% :
Any restrictions put in place by China regulators could have an impact on Baidu($BIDU). We have seen the company overcome issues in the past when it came to drugs and porn, so betting against the company or the stock is a risky venture. But I do think the cries for something to be done are louder today then with the previous problems.
I added some Baidu($BIDU) $175 puts yesterday and will likely look for some more positions to play for a move into the low $160s in the coming days.