Alibaba Stock Boosted By Ant Financial Buzz

Put buying has actually been unusually popular on BABA in recent weeks during the market turbulence

Managing Editor
Apr 10, 2018 at 9:47 AM
facebook twitter linkedin


Alibaba Group Holding Ltd (NYSE:BABA) is up 2.6% to trade at $174.35 this morning, after The Wall Street Journal (subscription required) reported that founder Jack Ma's Ant Financial is planning to raise $9 billion in its latest round of private funding. Back in February, Alibaba announced plans to take a 33% stake in Ant Financial.

The news has Alibaba stock trading back above its year-to-date breakeven level, as well as back near the 200-day moving average, a trendline that had served as support but was breached last week amid the broad-market pullback. Despite the equity's struggles lately, it's still up almost 58% over the past year.

A short squeeze could send BABA stock higher. Short interest fell by 1.4% in the last two reporting periods, yet the 122.61 million shares sold still represents 10% of the stock's total available float. At BABA's average daily trading volume, this is nearly seven days of pent-up buying demand. 

Although calls have outnumbered puts on an absolute basis in recent weeks, puts have become unusually popular. BABA sports a 10-day put/call volume ratio of 0.67 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- in the 100th percentile of its annual range, meaning puts have been bought to open at a much faster-than-usual rate relative to calls.

Finally, Alibaba stock sports a Schaeffer's Volatility Scorecard (SVS) of 91 out of 100. This indicates that the e-commerce name has handily rewarded premium buyers over the past year, often exceeding options traders' volatility expectations.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Common mistakes options traders make
 


 


 
Special Offers from Schaeffer's Trading Partners