Alibaba Is A Long-Term Play, Options Guru Says

Marketfy Maven Nic Chahine has traded Alibaba Group Holding Ltd BABA on the long side -- going into call spreads, getting out and cashing in premium -- which, he said, is the best way to trade it.

“Unless they’re outright lying, Alibaba is a long-term play,” he added.

Chahine is the author of Create Income With Options Spreads, and he recently joined Benzinga’s #PreMarket Prep to talk about what to watch in Alibaba and how he’s been playing it.

“I think the easy play on it -- I have a 13-year-old son. If I buy him a 2016 call, I know it’s going to be money for him to put toward school or something down the line,” he said.

Earlier this month, Alibaba shares just barely made it over the $100 level. Then they almost made it above $120 earlier this week.

“So, it’s like a 20 percent eyeball move in just a few days,” Chahine said.

While he maintained shares are a long-term play, he did concede that he's seen a recent decline.

“Recent downturn is possible on the short-term trading point,” he said. “Somebody’s got to take profit somewhere, especially if the markets get nervous.“

What Chahine is less sure about is Alibaba’s attempt at breaching into the U.S. shopping space with the online marketplace, 11 Main.

He’s been a member since the site was only accessible via invitation and said that it feels like walking into a Neiman Marcus.

“It’s not going to appeal to masses in the U.S.," he said. “So I don’t know what kind of impact people are expecting in 11 Main, but if there’s any weakness, it’s the U.S. market crack of Alibaba.”

Check out his full interview here:

Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.