Just like in calculus class, options trading comes down to eliminating as many unknowns to get to the right answer — narrowing the field of uncertainty, if you will. It’s not enough to bet that an underlying security will rise or fall. That’s just one part of the multi-faceted equation. The other major components are time and magnitude of price movement.

If any one of these elements are off, you’re going to be having a bad day at the office.

People in the sports shooting community refer to a concept known as parallax error. In a nutshell, when you’re moving around, the reticle or crosshairs can create a distortion where it appears that you’re on target when you’re way off. Ideally, an optical system will feature zero parallax; that is, what you see is what you hit (assuming your other fundamentals are aligned).

Let’s bring this back to options trading. Typically, new traders are lured into high-parallax wagers without them truly realizing it. In other words, they’re taking longshot wagers with big payouts. And while in some circumstances it makes sense to consider such trades, you must remember: it’s not just about being right, but how right, and also in the right time that matters.

Again, you can be accurate about the direction but wrong about the magnitude of movement — and that may turn your potential profit into a loss.

Instead, it’s better to be strategic and this is where PDD Holdings (PDD) comes into view. PDD stock skyrocketed on Monday thanks to President Donald Trump’s softer positioning on tariff policies, which has significant implications for China. Of course, with PDD being a Chinese online retailer, Wall Street greeted the development with a higher valuation.

However, PDD stock is still down more than 30% in the past six months, suggesting that we’re far removed from a sustainable, long-term solution. Skepticism may win out and that’s where so-called zero parallax PDD put spreads become very compelling.

Low-Conviction Unusual Options Activity Drives Case for PDD Stock Puts

At first glance, it might seem downright foolish to bet against PDD stock — and to be quite blunt, no one is saying that there’s no risk involved here. Still, the details appear to give away the true sentiment of the market.

On Monday, options flow — which focuses exclusively on big block transactions likely placed by institutional investors — shows net trade sentiment at $3.68 million, clearly favoring the bulls. But before traders rush to buy call options, here’s the reality: PDD stock also represented one of the names featured in Barchart’s unusual stock options volume but for being below average.

In fact, Monday’s total options volume of 105,560 contracts represented an 8.53% decline from the trailing one-month average metric. To be fair, it’s difficult to read into the numbers. That said, if you want my opinion, I’d classify this bullishness as a low-conviction affair.

Subsequently, I have a lingering suspicion that the $95 level that previously acted as support will now serve as resistance. That resistance may come sooner than expected, particularly if the geopolitical rhetoric doesn’t cool down significantly (it probably won’t).

Sure, PDD stock may temporarily pop above the $95 level, perhaps attempt to take out the critical $100 milestone. But if the current political paradigm gets in the way, PDD could correct its recent gains in a hurry. It’s a risky but rational proposition.

With that in mind, traders may want to turn to the 97.50/95 bear put spread for the options chain expiring April 25. This transaction involves buying the $97.50 put (at an ask of $545) and simultaneously selling the $95 put (at a bid of $390), resulting in a net debit of $155, the most that can be lost in the trade.

Should PDD stock fall to or below the $95 short strike price at expiration, the maximum reward is $95, a payout of 61.29%.

Here’s the thing: at a closing price of $94.78, PDD stock is already in a winning position, creating a zero-parallax risk profile.

Understanding the Rich Benefits of Zero Parallax

You know how beverage makers advertise zero sugar energy drinks and people gobble it up? That’s what we have with zero parallax debit spreads, such as the above 97.50/95 bear put spread.

Consider that the April 25 expiration date is roughly two weeks away. Calculating probabilities is a simple matter of dividing the number of target events with the total number in the dataset, which comes out to 51% — meaning that PDD stock features a slightly bullish bias.

Under a high-parallax debit spread, the short strike price is often miles away. At that point, we’re not just talking about PDD stock going up or down but by how much and by the right time. Suddenly, your risk modeling and probabilities go haywire accommodating three-dimensional variables.

With the zero-parallax bear put spread mentioned above, the position already starts slightly in the money, which pushes the advantage slightly in the bears’ favor. Now, the probabilities that you calculate is exactly what it is because you’re not worried about delta (price movement magnitude) and theta (time decay) works in your favor as the debit buyer.

Again, I’m not saying that there is no risk here. What I am saying is that if you want a no-frills moneyline bet, this is it.