...Option's strategy would be a longer trade than usual since BIDU stock is very volatile. Simple cross spreads trade with expiration...

  
   

Baidu, Inc. (Bidu) – Price: $118  market cap:41B  Price/Earnings:45.42 Beta:1.91Baidu is China’s biggest Internet search engine platform in the Chinese language. The Platform enables users to find relevant information online, including web pages, news, images and multimedia files. The Company designs and delivers its online marketing services primarily on its Baidu.com Website.
On the news: July 19th  Baidu Inc. announced that it has signed a landmark agreement for the distribution of digital music with One-Stop China (OSC), a joint venture whose shareholders are three of the leading global record companies: Universal Music, Warner Music, and Sony Music.
On June 24th Baidu Announces Agreement to Invest US$306 Million in Travel Search Engine Qunar. Baidu and Qunar, the leading travel search engine in China, jointly announced today a definitive agreement under which Baidu has committed to making a US$306 million strategic investment in Qunar. The investment will make Baidu the majority shareholder of Qunar.
We rate Baidu to hold basically based on two major factors. The first one is high valuation metrics that does not meet the required growth, and the second factor; Baidu's business activity depends on the macro economics and since China will keep its macroeconomic control policies, lately we so that Beijing also raised interest rates modestly and severely restricted issuance of mortgages for second- and third home purchases, Baidu is likely face challenging situation in 2012.

Google (GOOG) Price: $633 market cap: 323B Price/Earnings: 21.58 Beta: 1.13.
Google Inc. is the world's biggest Internet search engine platform. The Platform enables users to find relevant information online, including web pages, news, images and multimedia files. Revenues are delivered by its online advertising services still being its biggest cash cow. In the last years Google inc. have entered to the lucrative Smartphone playground and rapidly gaining market share since then. One of the known actions in order to increase its market share, recently acquired Motorola Mobility. Now numbers are speaking for themselves, and it's been clear that android has taken over with rate of 700,000 a day that is about 255 million units a year.

 

  
 

Based on the valuations data and their activity suspectedness above, it is obvious that GOOG will outperform BIDU for at least the near future in terms of global macro economics.

Short BIDU Vs. Long GOOG.
Option's strategy would be a longer trade than usual since BIDU stock is very volatile. Simple cross spreads trade with expiration three months henceforth  letting us to be right on the relatively longer term.