Most Active Weekly Options: Alibaba Group Holding Ltd (BABA)

Options traders are targeting end-of-week upside for Alibaba Group Holding Ltd


Published on Dec 1, 2014 at 11:55 AM
Updated on Apr 20, 2015 at 5:32 PM

The 20 stocks listed in the table below are the names that have attracted the highest weekly options volume during the past 10 trading days. Those highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Alibaba Group Holding Ltd (NYSE:BABA), where short-term strikes are attracting attention.

Most Active Weekly Options Table

Around midday, Alibaba Group Holding Ltd is down 4% to trade at $107.13, as overseas developments apply pressure to U.S. equities. Nevertheless, BABA calls are trading at 1.22 times the expected intraday rate. At the same time, the e-commerce stock's 30-day at-the-money implied volatility (IV) has soared 11% to 37%, signaling elevated demand for short-term strikes.

Digging deeper, the weekly 12/5 112-strike call is BABA's most popular option thus far in the session. More than 7,700 contracts have been exchanged at this out-of-the-money strike -- the majority at the ask price, suggesting buyer-driven activity. What's more, IV is exploding, and volume outstrips open interest, making it safe to assume fresh bullish bets are being initiated.

By buying to open the calls, today's speculators are gambling on a short-term rebound in Alibaba Group Holding Ltd (NYSE:BABA) shares. Specifically, they expect the stock to topple $112 by Friday's close, when the contracts expire. At last check, however, delta on the option was 0.18 -- down from 0.47 at the end of last week -- signifying a less than 1-in-5 chance the contract will be in the money at expiration.

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