Bears Strike Struggling Alibaba Group Holding Ltd (BABA)

Alibaba Group Holding Ltd could see bearish brokerage attention

Digital Content Group
Dec 24, 2014 at 10:10 AM
facebook twitter linkedin

Alibaba Group Holding Ltd (NYSE:BABA) dropped 3% yesterday to land at $105.52, bringing its month-to-date decline to 5.5%. Not surprisingly, puts traded at a 61% mark-up to the typical intraday pace.

Much of this activity can be traced to the January 2015 105-strike put, where a block of 5,200 contracts was exchanged in the morning, along with a matching lot of January 2015 105-strike calls -- creating a possible synthetic long position. However, it appears these contracts were tied to stock, clouding the speculator's motives.

A more straightforward play involved buy-to-open activity at BABA's January 2015 99-strike put. These traders are banking on continued downside in the shares through the close on Friday, Jan. 16, when the front-month options expire. Specifically, they're expecting the equity to settle below $99 at expiration -- a level that hasn't been breached since late October.

Elsewhere on the Street, the brokerage bunch is displaying extreme optimism toward Alibaba Group Holding Ltd (NYSE:BABA). All 22 covering analysts rate the shares a "buy" or "strong buy," and the stock's consensus 12-month price target stands in record-high territory, at $120.42. If BABA continues to struggle, a potential round of negative brokerage attention could intensify selling pressure.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1