Third Point Boosts Alibaba Stake Ahead of Singles Day

DIS rallies on expectations for new Star Wars and Marvel films, despite an earnings miss

Managing Editor
Nov 10, 2017 at 10:03 AM
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U.S. stocks are trading lower this morning amid fresh concerns over the Senate's proposed plan to delay corporate tax cuts until 2019. Among the stocks making moves today are entertainment powerhouse Walt Disney Company (NYSE:DIS), car rental company Hertz Global Holdings, Inc (NYSE:HTZ), and global e-commerce concern Alibaba Group Holding Ltd (NYSE:BABA). Here's a closer look at what's moving shares of DIS, HTZ, and BABA.

Disney Rallies on High Hopes for 2018

Shares of Walt Disney are trading higher this morning, as high hopes for a strong slate of 2018 films is overshadowing a fourth-quarter earnings miss. The stock is up 2.8% to trade at $105.55, and DIS is now on pace to settle above its 20-week moving average for the first time since late July.

Ahead of earnings, speculative players were showing some skepticism toward DIS. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.47 ranks in the highest percentile of its annual range. This suggests an extreme preference toward short-term puts over calls.

Options Traders Were Call-Heavy Ahead of Hertz Earnings

Hertz Global reported a third-quarter earnings beat after Thursday's close -- but the stock has erased a big pre-market rally to trade down 0.1% at $19.99, falling well short of the options market's predicted post-earnings move. That said, HTZ is still up about 135% from its late-June lows. 

Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows HTZ with a 10-day call/put volume ratio of 2.85, ranking in the 88th percentile of its annual range. This suggests that options traders were buying calls over puts at a faster-than-usual clip during the past two weeks.

Alibaba Higher After Third Point Ups Stake

Alibaba Group stock is soaring after hedge fund Third Point disclosed late Thursday that it has raised its stake in BABA by roughly 47% to 6.6 million shares. This news comes just ahead of the highly anticipated Singles Day shopping event, set to commence tomorrow morning. BABA stock was last seen up 0.6% at $186.21, trading just below last week's record high of $191.22.

Analysts following Alibaba stock are looking optimistic, with all 19 sporting "buy" or "strong buy" recommendations. Despite a drop in short interest from the stock's July 15 record high of 140.81 million shares, there are still 133.94 million shares sold short. This represents 11 days' worth of pent-up buying demand, at Alibaba stock's average daily pace of trading.


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