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Pro: Trading Baidu Using Options

Baidu shares surged after the Chinese Internet provider posted strong quarterly earnings results after Thursday's closing bell. To play it, Brian Stutland of Stutland Equities looked at a strategy using options.

After earnings are released, Stutland said options prices typically start to decline because volatility is taken out of the marketplace. People can no longer worry about how a company will do after the quarterly numbers are out, he explained. Baidu's earnings were great, but its valuation is still high. So anyone interested in this name really needs to believe the China story.

After Hours Action: Baidu

"We saw the emerging markets do very well today, so maybe there is this sector rotation into some of these stocks that are really beaten down," Stutland said. "As volatility starts to decline, I would use that opportunity [to] maybe pick up some calls if you want to play Baidu to the upside."

For long-term investors though, Stutland recommends Internet search provider Google over Baidu. Not only is Google's stock less expensive, but the company has a strong display advertising segment, too.

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