Options Strategist: Selloff In Alibaba Is An Opportunity For This 'Must Own' Stock

Thursday morning's post-earnings selloff in Alibaba Group Holding Ltd BABA is an opportunity to get into a “must own” stock, according to an options strategist.

Alibaba has come down significantly from a November post-IPO high of $120 to close Wednesday at $98.45. After reporting an EPS beat, shares were recently down more than 4 percent in the premarket.

Options strategist Nic Chahine sees support at and below $92.70, which is the price where Alibaba opened on its IPO day.

“The closer it gets to its IPO open, the more buyers it will attract. There are many more potential buyers who missed the entry on the IPO than there are sellers at discounted prices,” Chahine told Benzinga.

He recommends buying a long-dated debit call spread or LEAPS, which are options contracts that expire more than a year in the future. This allows traders to participate in the upside “with much smaller cost than buying the stock,” and therefore higher potential profits.