Alibaba Group Holding Ltd (NYSE:BABA)’s options are available on the market. With about 110,000 sold so far, the company enjoys a higher demand for calls than puts at a ratio of about 1.2 to 1 respectively, according to CNBC. The most interesting trade so far has been 3,000 pairs of November $85 puts and $95 calls, for $7.30 each of the contracts. This basically implies that the investor expects Alibaba Group Holding Ltd (NYSE:BABA)’s per share value to remain range-bound between $77.7 and $102.3.
“This is a yield enhancement trade likely against a long stock position assuming that volatility is going to come in, meaning they’re going to benefit from options’ prices coming in, but also the stock going sideways,” informed Dan Nathan.
Alibaba Group Holding Ltd (NYSE:BABA)’s price is around the $89.3 figure, showing a bump of about 0.5% during the day. We still have six weeks till predictions regarding the value per share falling in the range described by the above trader can be accurately made. So far, there’s little history from which to draw some tendencies or patterns for swings in price. Surely, one thing to notice is that the options will be cheaper as time passes and the market starts to digest better information about Alibaba Group Holding Ltd (NYSE:BABA).
“Here’s Facebook options since it went public in May of 2012. When you look at it, really pricing’s gone down. […] But really, what you would expect of out a $200 billion market cap company is lower options prices and I think that’s what this trader saw today,” said Dan Nathan.
One more interesting statistic regarding the financial contracts being traded is the fact that there were more calls than puts, which translates into investors expecting the price actually to rise. This optimism will serve Alibaba Group Holding Ltd (NYSE:BABA) well as expectations might boost the company’s stock value.
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