Bay Crest Partners’ Equity Derivatives Strategist Anshul Agarwal presented on Bloomberg TV his views regarding Yahoo! Inc. (NASDAQ:YHOO)‘s price spectrum. He believes it will be a bullish performance, at least after Alibaba’s Initial Public Offering (IPO), a fact that ultimately made him bet a price above $50 on October 17.
In general the tech company’s decisions have been carefully eyed by both analysts and investors and there have been many assumptions regarding how will Yahoo! Inc. (NASDAQ:YHOO) end up. Unfortunately, few of them predicted positive outcomes and most assumptions presented the upcoming IPO as the sole, or one of the few, resort that might cheer up the sad giant. The long-term future of Yahoo! Inc. (NASDAQ:YHOO) is fogged out of our vision, but its nearest fate is quite clearly shaped. It’s price will rise after the expected $155 billion IPO is going to take place, thus it is quite reasonable to think bullish of the search engine company when excluding long-term prospects.
“[…] I’m buying the October $45 – $50 call spread in Yahoo! for around 70 cents, stock trading on 41-ish. Where the stock is currently trading right now, it seems that the current Alibaba IPO valuation if sort of fully priced into the stock. So what I am doing is, looking for a further upside, really a derivative play on post-IPO Alibaba spiking up […],” said Anshul Agarwal.
The spread expires on October 17 and this is how far the bull can go apparently, assuming it passes well October 13, Yahoo! Inc. (NASDAQ:YHOO)’s earnings announcement date. Please note that Mr. Agarwal bets mostly on the fact that Alibaba allowed the Sunnyvale, California-based company not to sale its full stake at the IPO, only 27% will be offered to other investors. So, Yahoo! Inc. (NASDAQ:YHOO) is expected to grow in price, it is not clear for how long, but many find the short period convenient to bet on the company’s stock.