Best Stock on the Market

Put Options on BABA on 9/22/2015

Overhead Resistance on BABAAlibaba Group Holding Limited (BABA) operates as an online and mobile commerce company in the People’s Republic of China and internationally.

It operates Taobao Marketplace, an online shopping destination; Tmall, a third-party platform for brands and retailers; Juhuasuan, a group buying marketplace; Alibaba.com, an online wholesale marketplace; Alitrip, an online travel booking platform; 1688.com, an online wholesale marketplace; and AliExpress, a consumer marketplace.

The company also provides pay-for-performance and display marketing services through its Alimama marketing technology platform; Taobao Ad Network and Exchange (TANX), a real-time online advertising exchange in China; and data management platform that allows participants on TANX to evaluate and select online advertising inventory using behavioral data, as well as data from browsing behavior and shopping history.

In addition, it offers cloud computing services, including elastic computing, database services, and storage and large scale computing services through its Alibaba Cloud Computing platform; Web hosting and domain name registration services; payment and escrow services for buyers and sellers; and develops and operates mobile Web browsers. 

Since the company went public a year ago, shares have dropped nearly 30%. Share prices peaked in November when shares traded around $120. This past Sunday, the lock-up time expired on the stock which means nearly 1.6 billion shares, equivalent to 64% of its shares, become available for sale by insiders. See the chart and note the overhead declining trend line (shown in pink), and possibe $60 support line. A move to $50 is very much possible if insiders such as Yahoo! (YHOO) start selling shares. Yahoo! alone owns 15% of BABA shares.

 

Buy an October $62.50 Put Option Expiring on 10/16/2015

 

52-Week Trading Range: $58.00 to $120.00

Last Trade: $62.55

 

Trade

  • Buy 1 October $62.50 Put at $2.70
  • For a net debit of $2.70

Profit/Loss Analysis

  • Breakeven at $59.80
  • Maximum profit is unbounded
  • Maximum loss is ($270.00) at strike of $63.00

Closing Summary

  • Sold 1 October $62.50 Put at $4.90

Position closed on 9/24/2015 at price of $4.90 with a 81.48% gain in 1 days.

Updates

9/24/2015 11:19:49 AM

We are taking profits on BABA October 16 $62.50 Puts at $4.90.

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