Dan Nathan Spotted Unusual Options Activity In Alibaba
He noted that two times average daily options volume was traded, and the largest trade consisted of 10,000 contracts of the November collar.
A trader sold the November 22, 110 strike call options for $1.40 and bought the November 7 weekly, 94 strike put options for $2.40, paying net $1 for this trading structure, he added.
Against a long stock position, this trade allows the trader to participate on the upside up to $109 and the long position is protected below $94 ahead of the first earnings report for the publicly-traded company.
It reports on November 4.
In particular, Nathan emphasized that implied volatility for Alibaba's options has increased ahead of the important event.
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