Alan Knuckman of Bulls-Eye Options spoke on Bloomberg Markets about a bullish options strategy in Alibaba Group Holding LtdBABA.
He explained that the stock has been trading sideways for quite some time and he thinks it might break out to $90. Knuckman added that China has started to stabilize and although Alibaba is in the same sector as Amazon.com, Inc. AMZN it hasn't participated in the move higher.
To make a bullish bet, Knuckman wants to buy the October 72.50 call for $11. The breakeven for the trade is at $83.50 or 2.77 percent higher from the closing price on Friday. He would place a stop loss for a call option at $5.50.
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