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Dan Nathan spoke on
CNBC's Options Action about unusually high bullish options activity in
Alibaba Group Holding LtdBABA. He said that call options outnumbered puts 2 to 1 on a day when the stock dropped 5.61 percent.
When the stock was trading at $77, Nathan noticed a purchase of 2,000 contracts of the January 29 weekly 85-strike calls for $1. The break even for the trade is $86 or approximately 12 percent higher than the closing price on Monday. Nathan believes that the trader is maybe leveraging an existing long position ahead of the earnings report, which is due on January 29.
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