Option Plays - BABA
The trades below are for educational purposes only.
They are not recommendations to purchase any particular stock or options contract.
Note: they are suggested entry and exit points! disclaimer
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Stock Information Updated 8/16/18 |
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Company Name:ALIBABA.com Stock ticker symbol: BABA Current Price: $177.95 Change: +1.63 (+0.92%)
Weekly IV%: 70.19% MMM +/- 8.12
52-week high: $211.70 52-week low: $164.25
Stats since last update:
Institutional 40.54% - SAME Float - 123B - SAME Short Interest - 127.86M - SAME Market Cap - 444.38B SAME
Earnings: 8/23/18 BEFORE |
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Trade Bias: Cautiously Bullish |
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Trade Type: Lotto Calls/Puts
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BABA Trade Commentary
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8/22/18: Tomorrow morning, before the bell, BABA will release their earnings report. So far, the stock has made some good moves off the triple bottom I pointed out, and now we will see the final outcome of this move post earnings. The current MMM is +/- 8.182 with IV at 70.19%. Call / Put open interest has dropped down a bit since my last post but still remains very bullish.
My plans are to buy some wild card 160 Puts which are 2x the MMM for this week; and then sell some ITM Bull Put Spreads at the 190/185; plus buy some 190 calls for next week.
================================================================================== 8/19/18: It has been a long time since I last commented on BABA; and this stock has had some impressive moves over the years. BABA is a difficult stock to trade because it is NOT a "real" stock like most...it is a "holding company" stock and not subjected to the same scrutiny as regular listed stocks. There is always issues with their accounting practices; which makes fund manager a wee bit cautious to commit large capital; therefore, this stock does have some wild swings from time-to-time. Also, this stock is usually hard to borrow for shorting and that also stirs up the concerns of large capital investors; and since the China trade war news hit the markets, BABA has been on a long down trend from its all time highs at $211. It is believed that China's economy is on the decline; and that will continue to put pressure on this stock if/when that proves to be the actual case. BABA is known as the Amazon of China, so if Chinese consumers have less to spend, then BABA is going to continue to suffer; and so will their stock price here in the USA. When they report earnings this week, I am sure all ears will be on their "long term" growth plans because if they are not expanding horizons into other venues, then a slowing consumer economy is devastation for the stock. If they report a surprise quarter on their core business, then we could easily see a nice pop back to the 200MA at $187.00...maybe even go higher. If they meet expectations, then its gong to be up to guidance and future endeavors that will decide this stocks reaction and fate. Last week the stock put in a triple bottom pattern at major support around $166.00; and Thursday it closed with a tombstone DOJI SGB at $172. When stocks do double bottoms, they are heavily bought, but when a triple bottom comes, it can be total devastation if it fails to hold. Now that a SGB showed up, I will be watching close for clues to direction. This is a difficult one to choose a bias on, but when you see SGB's show up at the "bottom" its typically a long bias; and when they are at "tops" its a short bias; therefore, my thinking is to go with straddle plays on spreads (Iron Condor or Credit Spreads) and do some wildcard Lotto Trades up to 15% OTM. I am thinking the bias is still DOWN, so I plan on doing PUTS for this week and CALLS or Spreads with a longer time-frame after I see the action in the next couple of days.
Bias is still heavy to the long side so a surprise MISS and this stock could bet crushed!
BIG contract loads on Spreads
========================================================================================================= 4/19/15: I am flat on this stock for new trades, I will just hang onto the long shares for now. If you got short at the SGB then you are making some good gains at the moment, so look for profit taking to kick in around the $80 price point.
================================================================================================================== 4/12/15: The stock attempted to make a move last week and was cut short with another SGB. There is definitely some big selling going on and it is probably mostly lockup shares since the stock barely moved when they were released. I do not feel this stock will be much of a mover until it can clear the previous SGB at $91.50 so it most likely will continue to be range bound. The strategy for that is selling strangles and collecting time decay premium. There is always some news events that change things suddenly, so fishing around for some cheap call plays no further than 3% OTM can be interesting.
===================================================================================================== 4/5/15: Those two SGB's are definite keeping a lid on any upside for BABA so we have a nice price point to make decision with. Above $85.21 is a long bias and under $82.80 is a short bias; however, shorts are not to be traded aggressively, so if you are not able to actively trade your positions, then fish for long entry point with limit orders.
--------------------------------------------------------------------------------------------------------------------------------------------------------------- 3/30/15: Hmmm, go figure this one. The stock holds ground after the lockup, then it begins to rally as the markets sell off; and now it pulls back when the market races forward. Are we in for some April Foolin around? Well, we have two SGB's and that means the downside is the bias; however, this stock has a lot of speculation, future and love, so shorting aggressively is very risky business. I am still waiting for a dip under $80 so I can accumulate more shares for the long haul.
================================================================================================================== 3/27/15: The stock has been pretty resilient in the face of a market wide sell off which is a good sign that big money investors are holding on for the long term. I am still hoping for a dip under $80 to buy more shares, but I am also looking for long plays because once the selling stops, BABA will be one of the leaders to move higher.
============================================================================================================= 3/19/15: So far the post lockup release is not crushing the stocks price and I am sure all those shares are not being sold off immediately; otherwise, this stock would definitely have dropped lower. The volume the past two days has gone up substantially so we can see there definitely is selling, but based on the large candle wicks, that selling is met with buying pressure which is definitely bullish. I would love to see the stock fall back under $80 so I can get more shares on, but we trade what we are given and I have been doing a lot of day trading in the stock this week. Tomorrow may be volatile but trading any options is going to be difficult, so if you do try some puts go with the $84 strike and make it an all or nothing trade so do not bet big on this one.
========================================================================================================================== 3/16/15: We are getting close the the IPO lockup and BABA appears to be finding support at $81. This can be a BLUFF and when those shares are released, the stock could easily get whacked so we speculate short term with puts and longer term with calls. I hope to get a dip down in the low 70's so I can just add more shares because I am a long term investor in the stock and short term speculator in the options.
====================================================================================================================== 3/10/15: If BABA holds ground here in the face of a continued market sell off, that will prove to be a very bullish opportunity so I plan to keep fishing for some call plays with small size. Until the stock can get back over the SGB zone at $90, I am not getting aggressive. The lock up is coming on Thursday, so I do not see BABA making any big moves higher. In fact, I am hoping for a blowout drop under $75 so I can get more shares to hold onto.
=================================================================================================================== 3/3/15: News about possible sales figure tampering (fake ordering called "brushing") has the stock getting dumped, but now it's looking like a real bargain to some; however, Forrest Gump may have a thing or two to say about that...he invested in AAPL remember? I still want to trade this stock tot he upside; however, everything dollar you put in now is a trip to the candy store and when you are buying a box of chocolates, you never know what your gonna get. I was stopped out of the B180 and I have been day trading shares the past couple of days looking for a bounce opportunity. If the stock does not get back over the post IPO low, then it could very well see a 5-10% dip from current prices where I suspect a lot of bargain hunters are waiting to buy in. The upcoming lockup period coming March 18th when 429 million shares will be available for sale to the public market. This amount will actually be more shares than the initial IPO of 320 million. The biggest lock up does not come until Sept. 20, 2015 when a massive 1.6 billions shares will be released, so the more there is, the harder it becomes for the stock to move around. So, until the 18th rolls around, I think the speculators will be sitting it out and the stock could just keep sliding lower. Then again, it seems to me that when negative news hits on stocks of this caliber they tend to countertrend because the big money is always looking to push small investors into a hole of uncertainty and take their shares before the lock up comes. Keep an eye on how the stock trades over the next few days at the post IPO lows.
======================================================================================================== 2/10/15: Earning sell off is looking like it's over and we now have a long term Bull 180 in place on the weekly chart. I am looking for T1 as my first exit point.
======================================================================================================= 1/7/15: A new year is under way and this stock is one to watch and trade! They are going to start expanding, buying up companies and gaining ever more market share. This is one you can fish with OTM calls and puts because the moves will be explosive and that is what we want! I plan to start putting in orders this week and layering my contract size because I know I will catch several times and one day I will have a 6 FIGURE profit!
================================================================================================== 12/13/14: With markets getting crushed all week, BABA shows relative strength and closed up on Friday when the DJ30 accelerated lower and closed down -300 points. This tells me something is definitely brewing with the stock; and if they do make an announcement about a deal with AAPL, we could get a very impressive rally that will have legs to run. I am still fishing for some long positions and holding on to my shares for a long term investment. I plan to also continue with selling premium spreads too. I was filled on the 115 calls and currently getting crushed on the Dec14 120 calls but a big news story can certainly change that. I plan to add some more Dec14 115's on Monday as my Lotto Play.
========================================================================================================== 12/4/14: Dropped under the SGB and bounced on my T2 line. Now testing the SGB zone again and with those rumors out there, the longer there is no announcement, the less interested investors become but I will keep fishing call options because if and when that happens, the rally will probably be a huge one.
============================================================================================================= 11/30/14: Testing the SGB and holding so far but a dip under is not an aggressive short for me with speculation they could cut a deal with AAPL. I am sticking to fishing for that news even and will continue to buy OTM calls. As long as BABA holds $110, I will add to my 120 calls. If it falls under this I will pick up some $115's.
============================================================================================================== 11/26/14: Since BABA had their big "retail" day, there is not much going on this week with the stock. So far the SGB has not been confirmed yet, but any dips and am a buyer. If they do cut a deal with AAPL the stock will most likely jump right past $120 if it holds aroundd current price levels.
=================================================================================================================== 11/22/14: Friday produced a SGB on the daily chart but that may not matter if BABA announces deal with AAPL. This stock is either going to be the biggest company in the world some day or known as the biggest sham in IPO history. But wait, it's currently the biggest IPO in the history of the American stock exchange so how could it become a sham or grand slam? When you are presented with information on stocks to invest in, you need to always view that information with a double grain of salt—especially in this way over heated market. Stocks have been touted as good investments since the beginning and yes, if you bought (the right ones like: IBM, KO, AAPL, MSFT, NFLX, AMZN etc. ) and held for a very long time, then you eventually were rewarded with large gains, dividends and wealth. What we have with BABA is a very strong opportunity to repeat history for the long run, but it can be a tricky situation with this particular stock. Currently, everyone is enamored with CEO Jack Ma and his meteoric rise to prominence since the IPO of his company Alibaba (BABA). He has been on a media tour making all kinds of interesting comments and story telling scenarios to keep people interested. Recently, it was reported that he made a comment that his company could be the king of retail vs. AMZN. He lamented that 20 years from now AMZN may not even be in business!
"I would say that my model is good, Amazon would say that their model is good," Ma said in his closing remarks. "We'll see who will still be here 20 years from now." – source Bloomberg
Translation: All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved. Jack Ma is a very long term thinker as all Chinese businessmen are. I am sure Jeff Bezos is also in that circle of thought, but will AMZN be able to capitalize on the future or just keep burning cash betting on the come? I would venture to say that Ma is a better business man from an Art of War perspective, so you have to consider investing in his company will need to be in like kind with his espoused view point of "long term." As for making investments in BABA, well, that has a lot to offer, but it comes with the price of speculation. BABA is a foreign company doing business in America. This is a wild card that can be changed in an instant with politics between the US and China. You may recall that BABA is trading on the US stock market as a "shell company" because China does not allow foreign ownership in their country; therefore, your shares do not have the same regulated advantages as other US based stocks do. When you by shares of BABA, you are NOT buying shares of the "company" you are buying the potential of profits in the company. That is a very troubling investment for long term thinking, but who really knows what the future holds. Only Jack Ma knows what direction he wants to go; and that can easily be changed, so joining in on his dream of world domination can be exciting, potentially very profitable or painful, so commit only what you are prepared to part with and hold on for the ride—I plan to keep trading this stock and use profits to build a portfolio of shares, that way, if things blow up in the future, I did not lose my capital per say. On a side note, if you were watching CNBC the day of the IPO day, Jack Ma was asked who was one of his heroes in life. He said he looked up to and admired Forrest Gump as if he was a living person. I am sure this tugged on many heart strings of viewers, but you have to consider that is a bit of a fairy tale statement and a little strange. Another thing I would like to point out is why did Jack Ma choose the name Ali Baba when the story tells us that Ali Baba stole gold from a den of thieves? To many, that would be ok, after all, he was only taking from those who took from others right? Of all the names to choose, why choose one based on thievery? A perplexing moral question no doubt, but you will have to decide how to interpret that when you choose to invest in BABA.
================================================================================================== 11/20/14: Yes, the SGB strikes again and down BABA went. Can you believe it stopped right at my T2 line today? Yup, I can and bought some shares today to test the waters. News keeps flowing and the CEO is on a celebrity type ride which give this stock some pause and excitement all a the same time. I expect investors to start buying again and should the stock get punched down to T3 then I get aggressive on some long positions.
================================================================================================================= 11/15/14: What we have here is pause in the action and of course, the notorious SGB on the weekly chart. Since this stock is a very HOT item right now, I do not recommend aggressive shorts. Any dips will definitely be viewed as buy opportunities so I will look for longs on any moves down to T2 and T3. If the stock reversed course this week and takes out the red bars on the daily, then I get some longs on and sell some more OTM Bull Put Spreads.
================================================================================================================== 11/9/14: Impressive rallies post earnings takes BABA to the limits of new heights. Now that earnings season is over, investors are looking for value and growth stores to put money to work and BABA is definitely a TOP PICK on the growth front. This stock is a longer term investment and every dip that does not have a SGB involved is a buy opportunity. I suspect there will be a SGB soon, so we will have a pivot point to trade form if/when that does present itself. It's no doubt in my mind the Bear Call Spread will expire at a full loss, but I more than made up for it with the shares, calls and Bull Put Spreads. Now I will be looking for more opportunities to sell premium and speculate on longs going forward. If you want to buy calls then FISH for lower entry prices and be patient because there will be continued volatility in this stock for some time and you do not want to be the sucker to always chasing losses.
============================================================================================================= 11/5/14: More new highs as BABA gets upgrades galore with price targets to $120. You always have to be a little suspect when lofty upgrades get announced right after earnings. More often than not, stocks get pumped and dumped, initially. I was trail stopped out of my NovWk1 calls today so I will be looking for another entry point with more time. If we get any pull back to the 8MA I am on it with aggressive calls.
========================================================================================================== 11/4/14: BABA beats as anticipated and the stock makes a decent move higher. A wee bit subdued in early trading as the stock pulled back initially off the news, but once the markets opened up, investors shrugged it off and hit the buy buy button with enthusiasm all day! I think we have a multi-day move coming on and with the GOP taking the Senate, we have the potential for a strong rally in the markets. Should that be the case, BABA is going to be a lead runner for the rest of 2014 and 2015! I killed it today in BABA!!
===================================================================================================== 11/3/14: Investors hit the gas today taking BABA over $100 a share, and in after hours trading, they bid up the stock over $105.00! The company is set to report earnings before the open so if you are not already in the trades, then you have to wait for the reaction and it's going to be an explosive one if after hours is any indication. Expected MMM is +/- 6.37 but this stock is more than capable of moving over 2x that number. Of course, we will have to wait and see, but rest assured, there will be plenty of trading opportunities to come. It's highly anticipated they will report a very good first quarter and you would have to think the management would not flub this up being its the first one since going public. This is a massive GROWTH story and if they show investors they are in for the long haul, then we will see this stock among the heights of GOOGL, AAPL, AMZN etc. maybe even take out PCLN heights in the future. Investing in this stock is more of an "investment". You just need to buy shares and take the ride for the next 5+ years. As for short term trading, we will have massive profit opportunities and I plan to make well over $1 MILLION bucks trading this stock in the coming years...are you ready to make it with me? I am sure we will have a good WW trade coming soon too!
======================================================================================================== 11/2/14: This stock WILL launch over $100 soon, but it may have to wait until earnings are release this week on 11/4/14. I will definitely have a straddle play the day before earnings just in case its a big disappointment.
========================================================================================================= 10/29/14: BABA is testing the IPO highs and looking like a good candidate to break out over $100 and never look back. Too bad FB can't get here yet, but it will and when that day comes, it too will never look back. Ok, so we need to get ready to take the ride on this stock, but not with big bucks quite yet because we have to wait and see how the company reports earnings and guidance. I have my current positions in place but I do plan to do a little speculation with some Lotto calls for this week and next. To help finance this, I will sell some Nov. Bear Calls Spreads just in case the stock retreats from here.
===================================================================================================================== 10/16/14: BABA is attempting to rally again in spite of the market correction. This indicates a lot of strength and conviction; however, until it gets over the SGB and stays over it, I am just hanging onto my shares.
======================================================================================================= 10/12/14: BABA has not recovered from it's IPO selling but long term this stock is definitely going to be a player. I am closing out my Bear Call spread for a nice gain tomorrow, and will just hold my shares for now. I want to see this stock move back over the SGB at $90 before I start to get aggressive again.
====================================================================================================== 10/5/14: BABA tested the low of the IPO on Friday and pulled back all day but now it's a perfect Bull 180 setup on the 15 min chart. If that fails on Monday, then I will continue to hold my Bear Call Spread
=================================================================================================================== 9/29/14: Looking like the options are pretty fairly priced and there is NO premium further OTM so selling spreads/condors is not advisable at this time since the IV is very low. I am looking for some more downside before I jump in so I plan to sell a couple Bear Call Spreads to test the waters since the stock is now trading under the IPO low.
===================================================================================================== 9/28/14: This week BABA starts trading options so expect a lot of volatility in the first couple of days. I am sure spreads will be wide and IV pumped in, so if you plan on getting in on the action, be sure to fish for entry points because the market makers will be very busy attempting to sucker in as much IV as possible. There will not be any weekly options for the time being, so that means they have a lot more opportunity to manipulate the price movements. There is simply not enough chart data to predict anything, but I will be on the lookout for SGB's which I think will be the reverse effect in the beginning—that is to say, if we do get the SGB, I would look for long plays. The MM's have front month options priced out to 135/130 and I do not expect the stock to rally that high, so I plan on selling some 135 Bear Call Spreads at the open and also some 70/75 Bull Put Spreads if there is enough premium. If BABA does make a run, it will definitely test $100 so I am going to speculate on some Lotto calls. My plan is to buy one at the open, then fish for lower prices later in the trading day if we get them.
================================================================================================================= 9/23/14: Where's the love? Investors are still selling and big money buyers are just waiting for the pullback to get in. Where will that be? Cramer says to buy in the low 80's and so we should expect an initial bounce soon once options start up next week.
==================================================================================================================== 9/21/14: The biggest IPO in history was handled professionally and orderly. I was watching the entire even unfold on CNBC and learned a few things about how the IPO process works. It was some of the best content I have seen on CNBC in a very long time. Once trading opened up, the stock short up rapidly and it looked strong for BABA to take out $100, but that was not the case—the big money was not there with buy orders...they were selling that benchmark price. I managed to catch some shares at the open selling my first round at $98.99; however, even though that was a good trade, it was only 100 shares so I was not that satisfied because I was trying to get 1000 shares and could not get filled on my initial order. Ok, so guess what I did...lol...I sold my 100 shares near the top and then when I thought it was about to bust out over $100, I bought in again, but this time, I pulled the trigger on 1,000 shares! Of course, I was one of the suckers to buy that top; and so I did what all professional IDIOTS do, I doubled down baby when the stock pulled back a couple of bucks! As you can guess, that was just the second level for the dumb money (ME) to get in as more accelerated selling continued. Now guess what happened next? Yup, you probably guessed it, I capitulated at the EXACT BOTTOM!!!!!
Here are all my trades to show you why you NEVER trade IPO's off 1 minute charts!!!!!!
Once I capitulated and dumped my position wiping out all my initial profits for the day, I was a wee bit frustrated. Now most traders would have just sat and watched (I used to do that in the beginning of my career), but hey, I am a PROFESSIONAL trader with 17 years of experience—I RELOADED WHEN THE TIMING WAS RIGHT AND RODE IT BACK UP! Why did I do that? Because I know from painful experience, 90% of the time when you give up, that is the EXACT moment to BUCK UP! When I looked back at the end of the day at all of my trading activity, what amazed me is how freaking accurate I was at picking the tops and EXACT bottom of the days trading range...lol! Well, I managed to get back 35% of the beating I took ending the day overall positive, but I am ok with how things worked out because I know how to day trade; and I will easily make a lot of money on this stock going forward! Once options begin trading, I will find you a lot of very profitable trades too!
My final trades at the end of the day:
It's always easy to look at a static chart after the fact and say things like, why did you buy or sell there? Why didn't youwait longer or why did you??? You have to realize, when the chart is MOVING, and you have no idea where the stock is actually going, so you trade what get and hope to work out to a profit by the end of the day...sometimes...lol. At the end, I kept 100 shares over night and will continue to trade BABA until I get all of my initial losses recovered; and then I plan to make a MILLION BUCKS on this stock once options start trading in a week! Now that the stock is active, we start to listen, dig for information and pick sides as we decide to invest in this stock. There will be plenty of naysayers complaining about market cap, PE ratio, etc., but this company is already a massive success world wide with only room to grow even more with a 231 BILLION market cap and 25 BILLION dollars of free cash from the IPO! For now, BABA is a stock to trade and own, so I will be making this one of my top picks to follow for a long time. There are a couple of things to consider with this stock when you decide to invest in it long term. First, you are NOT buying actual shares in the Alibaba company; you are buying shares in a holding company based in the Cayman Islands. This means, profits are not directly transferred and subject to all kinds of mishaps, communist Chinese government interference and potential shenanigans. Second, this company has been around for a long time. In fact, they once traded on the Hong Kong stock exchange and actually bought back all their shares and delisted. In the past, a lot of Chinese companies that have come to the American Stock Exchanges have not worked out too well, but this time it could be quite a different outcome. Here are a couple of interesting articles with some good details: http://www.cnbc.com/id/102018464 The CEO, Jack Ma seems to be quite the genuine rags to riches entrepreneur that appears to be a very humble guy. He amazed everyone when he said his biggest influence/hero was the fictional character, Forrest Gump! HE said that every time he gets frustrated, he watches that movie for inspiration. He said "no matter whatever changed, you are you, and I'm still the guy who, 15 years ago, only earned $20 a month."...now he is the richest man in China and 70th wealthiest person in the world...WOW! http://www.cnbc.com/id/102016738 Here is some great advice from Mr. Ma So what can we expect this week? What I am looking for is how the stock trades around the IPO opening price of $92.70 in the first 15 minutes of trading. If we get that move higher in the open, then I will put in a stop $1.00 under Friday's opening price on my final 100 shares and looking for a re-test double top scenario. We cannot short this stock yet, but a move over $100 and its ON for the bulls if there is genuine institutional buying interest. If the stock moves lower, then I am looking to buy some shares as close to the initial IPO price of $68 as possible—but it may never get below $80 so start legging in around that price. My long term goal is to sell premium and use profits to accumulate shares for the long haul, that way, if things turn sour, I am only playing the stock with profits vs. capital. I am sure there will be a lot of potential buyouts and bids on other hot companies so we have to anticipate that and put in fishing Lotto orders on stocks like YHOO, EBAY,BIDU and other up and coming Chinese stocks. Bottom line, you are NOT going to see very many "guru" types pitching you trade ideas, advice, training etc. actually show you their REAL MONEY trades! Here you go:
What can you learn from this? NEVER DAY TRADE IPO STOCKS ON A 1 MINUTE CHARTS!! LOL If you trade off a 15 min chart, you can see it would have been a lot easier to see the tops and bottoms!
========================================================================================================== 9/19/14: The biggest IPO in history (to date) is about to happen today and everyone wants a piece of this pie! Of course there are the naysayers and cheerleaders, so take your positions and HOLD ON for a long ride. You MUST fish with limit orders. Give yourself up to $20 window once the stock opens up for trading. Stagger your orders so you can get picked up because the volatility will be massive and any prices you see on the screen will be 100% WRONG!! Once you get filled put in limit sell orders $5 - !10 higher if you plan to do some scalping. This trade idea is an investment so only tie up capital you want to have in the stock for at least one year. They will release options in a week, so if you only want to dabble in the stock then wait for the options because there will be plenty of opportunities on this stock!!$$!!
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