To The Moon

I. Smartphone Business Holds the Fort, Overall Results in Line with Expectations

Smartphone average selling price hit an all-time high (passing through rising costs) → Q2 smartphone gross margin remained above 8%.

Shipments exceeded expectations: Omdia data showed Q2 shipments of 31.2 million units, 15% above Morgan Stanley's forecast.

New model launches and export plans are key to restarting growth: EV sales have slowed significantly in 2026 year-to-date. To reignite market enthusiasm, Xiaomi plans to deliver its first SUV model in late September 2026. Additionally, Xiaomi plans to begin exporting vehicles in 2027.

Overall financials: Total revenue is expected to exceed RMB 100 billion, with recurring net profit of approximately RMB 6 billion, in line with expectations.

Core tension: Smartphones are strong (ASP at record highs, shipments beat expectations), but gaming is weak + EV competition/investment concerns are overhangs. Earnings are broadly in line with expectations; whether it can beat will depend on the EV segment.

II. Volatility Estimates and Key Levels

Based on the current price of HK$25.88 and IV of 37.52%, this week's implied move is approximately ±4.5%, corresponding to a range of roughly HK$24.7–27.0.

Hong Kong options open interest further shows:

• Upside resistance (Call wall): 27 → 28 (10,400 contracts) → 30.

• Downside support (Put wall): 26 (6.4k) → 24 (4.6k) → 23 (3.3k).

• Put/Call OI = 0.61 (call-dominated, sentiment not bearish).

Summary: The current price of HK$25.88 is sitting just below the 26 Put wall. The actual post-earnings range could be wider than ±4.5% → upside to 27–28, downside to 24–23.

III. Three Scenarios and Corresponding Strategies (Illustrative, Not Recommendations)

Scenario 1: Range-bound oscillation (24.7–27.0, move ≤ ±4.5%) — Higher Probability

Q2 results in line (strong smartphones, no EV surprises), post-earnings IV eases (IV crush) — favors sellers:

• Shareholders can sell Covered Calls: sell 27–28 Calls $MIU.HK 20260821 27.50 CALL$ (near the thickest Call wall) to collect premium while capping the upside.

• Those willing to take assignment can sell Puts at 24 / 23 (Put walls) — Xiaomi has an Overweight rating with a HK$32 target, allowing you to buy a quality name at a discount.

• ⚠️ Hong Kong options liquidity is thinner than U.S. large caps — watch bid-ask spreads and contract sizes.

Scenario 2: Breaks above 27 → pushes toward 28 (EV orders / smartphones beat expectations)

A high-volume breakout:

• Consider a Bull Call Spread, e.g., buy 26 / sell 28 (28 is a 10,400-contract Call wall — selling there collects premium).

• 28 is a hard ceiling — it would take a genuine EV/smartphone surprise to push through. However, the OW target of 32 still leaves room for imagination.

• More conservatively: wait for a confirmed retest after breaking 27 before following the trend.

Scenario 3: Breaks below 24 (gross margin pressure / EV concerns materialize)

Breaks below 26 → 24:

• For trend followers: Consider a Bear Put Spread, e.g., buy 24 / sell 23, to control costs.

• Don't rush to catch the falling knife. However, with valuations cheap (target HK$32, +11% upside) → after stabilization, selling Puts in staggered lots at 24 / 23 (Put walls) is the strongest logical play.

• ⚠️ Risk: Hong Kong market sentiment / EV competitive pressures could amplify downside.

⚠️ Disclaimer: The above is an observational analysis of public data and a strategy illustration, provided for educational and discussion purposes only. It does not constitute investment advice. Hong Kong options carry assignment/exercise risk. Open interest data is as of the end of the trading day. Investing involves risk; please conduct your own assessment.