The Relation Between Alibaba IPO and Yahoo! Inc. (YHOO)’s Stock Price

Covering the Yahoo stock on ‘Options Action,’ CNBC contributor Dan Nathan commented on the recent activity in the options segment for Yahoo! Inc. (NASDAQ:YHOO).

He said that the options volume was 2.5 times the daily average volume recently and a big part of that included selling of around 90,000 of Jan 2014 call options. He also pointed to the movement in the Yahoo! Inc. (NASDAQ:YHOO) stock since 2013 when rumors about the Alibaba.com IPO started to appear.

Analyzing Yahoo! Inc. (NASDAQ:YHOO)’s stock movement since 2013, Nathan said:“The stock I think was almost up a 100% last year.” Coming to the 2014 stock movements, he said, “it’s really gone sideways here okay, and the stock is actually down 15%.”

Looking at the year-to-day technical chart, Nathan marked the May 6, 2014, when Alibaba.com had filed S-1 for an IPO. The point showed a decline of the Yahoo! Inc. (NASDAQ:YHOO)’s stock and a sideways movement after that. Afterward, the stock had recovered a bit but again the stock showed a similar decline on June 16, 2014 when Alibaba.com had filed an amendment to the S-1.

Nathan said that last year it mainly remained a buy for investors based on rumors and, this year it is a sell for investors based on news. Nathan also analyzed the implied volatility chart for Yahoo! Inc. (NASDAQ:YHOO) and added that the implied volatility for Yahoo is increasing even though for other stocks it is near multi-year lows.

“People are worried; Marissa Mayer is going to be on the clock here, once they get this cash from Alibaba, when they monetize a portion of their stake. And investors are basically saying they don’t trust that she’s going to make good decisions with their money.”

Meanwhile, the IPO of Alibaba.com is slated to become the world’s largest IPO with a value of around U.S. $26 Billion to be raised and Yahoo! Inc. (NASDAQ:YHOO)’s stake in Alibaba.com is around 22.6%.

Disclosure: none