On CNBC's Options Action, Dan Nathan spoke about unusually high options volume in Alibaba Group Holding Ltd BABA ahead of earnings.
Call options trading volume was two times higher than the average daily call options trading volume on a day when the stock spiked 4.26 percent. During the trading session, Nathan noticed a purchase of 8,000 contracts of the January 100 calls in Alibaba for $0.28. The trade breaks even at $100.28 or 6.26 percent above the current market price.
Nathan said that the purchase of the January 100 calls is a low probability trade and he would increase the probability of making money by extending the expiration to February and he would buy a call spread.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
