Alibaba Options Pop After Company Announces Split

Options traders are targeting the equity in response

Deputy Editor
Mar 28, 2023 at 1:05 PM
facebook X logo linkedin


Alibaba Group Holding Ltd (NYSE:BABA) announced Tuesday that the company will split into six businesses, each with the ability to raise outside funding, go public, and be managed by its own CEO and board of directors.

Alibaba stock is jumping in response. The shares were last seen 11.2% higher to trade at $95.74, moving back above their year-to-date breakeven and pacing for their best close in more than a month. More importantly, BABA late last month experienced a golden cross of its 80-day and 200-day moving averages -- of which, the shares are now wedged between. This could indicated further gains for the equity in the coming weeks.

BABAwithgoldencross

The China-based e-commerce giant's options pits are exploding with activity today, too. Total options volume is running at quadruple the average intraday amount, with 446,000 calls and 119,000 puts exchanged so far. The weekly 3/31 100-strike call is leading the charge, followed by the June 100 call, and new positions are being opened at both contracts.

A broader look shows calls have been the popular options of late. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows BABA 's 10-day call/put volume ratio of 4.48 ranks in the elevated 99th annual percentile. Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.40 stands higher than just 2% of annual readings.

Now looks like a good time to weigh in on the security's next move with options. The stock is seeing attractively priced premiums at the moment, per Alibaba stock's Schaeffer's Volatility Index (SVI) of 46%, which sits in the low 3rd percentile of its annual range. Plus, the equity's Schaeffer's Volatility Scorecard (SVS) of 87 out of 100 means the stock has exceeded option traders' volatility expectations during the past year.

 
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI