Struggling Chinese Stock Popular Among Options Traders

Year-over-year, BABA is down more than 53%

Digital Content Manager
Jun 13, 2022 at 2:01 PM
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Alibaba Group Holding Ltd (NYSE:BABA) is sinking alongside the broader market today, last seen down 9.7% to trade at $99.15. The security's latest rally lost steam at the $121 level, with the shares today eyeing a move back below the 100-day moving average after briefly surging above the trendline last week. Now, BABA is pacing for its third-consecutive daily loss, and worst single-day percentage drop since March 14. Year-over-year, BABA is down 53.2%.


BABA 100 Day

What's more, Alibaba stock recently appeared on Schaeffer's Senior Quantitative Analyst Rocky White's list of names that have attracted the highest weekly options volume within the past two weeks. Per this data, 2,485,765 calls and 1,286,936 puts were exchanged in this two-week time period. The June 110  call was the most popular contract, followed by the weekly 6/10 110-strike call.

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While calls outnumbered puts on an overall basis, the latter were picked up at a much quicker-than-usual clip over the last 10 weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the Chinese tech stock sports a 50-day put/call volume ratio of 0.45 that sits higher than 93% of other readings from the past year.

The brokerage bunch remains optimistic towards Alibaba stock, with nine of 11 analysts in question carrying a "buy" or better. What's more, the 12-month consensus target price of $163.10 is a 64.6% premium to current levels.

For those looking to weigh in, options look like a solid move at the moment. According to its Schaeffer's Volatility Scorecard (SVS) tally of 77 out of 100, BABA has consistently realized bigger returns than options traders have priced in over the last 12 month


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