Bearish Speculators Take Aim at Alibaba (BABA)

Alibaba Group Holding Ltd (BABA) is in the midst of a multi-month downtrend

Digital Content Group

Mar 24, 2015 at 12:10 PM

BABA

Overall options volume is accelerated on Alibaba Group Holding Ltd (NYSE:BABA), with both calls and puts changing hands at a faster-than-usual rate. Among the most popular contracts is the weekly 3/27 83-strike put. Data is giving the impression of buy-to-open activity here, with speculators anticipating shares of the e-commerce giant will fall below $83 by the close this Friday, when the options expire. As it stands now, BABA's intraday low is $82.39.

Analysts have, for the most part, ignored the stock's 30% drop since hitting a record peak of $120 in mid-November, as all 22 covering brokerage firms maintain "buy" or better recommendations. The stock did see a price-target cut on Friday, which lowered its average 12-month price target to $110.62 -- but that figure still represents a 33% premium to current trading levels.

As was mentioned, Alibaba Group Holding Ltd (NYSE:BABA) has been in a funk of late, and that trend is continuing today. The equity was last seen 1.1% lower at $83.33. In light of BABA's recent struggles, short interest jumped over 34% during the past two reporting periods.

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