Alibaba Can't Catch A Break: Options Traders Mixed On Stock's Future

Alibaba Group Holding Ltd BABA was trading lower Tuesday following more negative news for the company out of China.

The country’s data security law, likely to come into effect this September, will impose stricter rules on how Alibaba collects and handles user data.

The stock has lost over 50% of its value since October, when Alibaba reached a Oct. 27, 2020 all-time high of $319.32 amid Chinese regulartory issues and poor U.S.-China relations.

Whether Alibaba’s stock has found a bottom has yet to be seen, and options traders are mixed on what lies ahead for the company.

On Tuesday morning, traders began hammering both bullish and bearish Alibaba options. The bullish options traders bet over $8.78 million Aliababa will trade higher over the coming months, while bearish options traders bet over $6.33 million the stock is headed lower.

Most bullish traders purchased leaps (far-dated calls) while and most of the bearish traders bought closer dated calls indicating Alibaba is headed lower near-term but will rebound into 2022. The options trades below were filtered to only include those with a total purchase price of over $100,000.

See Also: How to Buy Alibaba Stock

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price.

A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Bullish BABA Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:26 a.m., a trader executed a call sweep at the ask of 444 Alibaba options with a strike price of $150 expiring on March 18, 2022. The trade represented a $1.18 million bullish bet for which the trader paid $26.64 per option contract.
• At 10:26 a.m., a trader executed a call sweep at the ask of 717 Alibaba options with a strike price of $150 expiring on June 17, 2022. The trade represented a $2.21 million bullish bet for which the trader paid $30.95 per option contract.
• At 10:27 a.m., a trader executed a call sweep at the ask of 262 Alibaba options with a strike price of $150 expiring on June 17, 2022. The trade represented a $816,130 bullish bet for which the trader paid $31.15 per option contract.
• At 10:27 a.m., a trader executed a call sweep at the ask of 462 Alibaba options with a strike price of $150 expiring on March 18, 2022. The trade represented a $2.21 million bullish bet for which the trader paid $26.99 per option contract.
• At 10:27 a.m., a trader executed a call sweep at the ask of 417 Alibaba options with a strike price of $150 expiring on March 18, 2022. The trade represented a $1.12 million bullish bet for which the trader paid $26.98 per option contract.
• At 11:16 a.m., a trader executed a call sweep at the ask of 641 Alibaba options with a strike price of $160 expiring on Oct. 15. The trade represented a $554,465 bullish bet for which the trader paid $8.65 per option contract.
• At 11:17 a.m., a trader executed a call sweep at the ask of 737 Alibaba options with a strike price of $160 expiring on Oct. 22. The trade represented a $431,145 bullish bet for which the trader paid $5.85 per option contract.
• At 11:24 a.m., a trader executed a call sweep at the ask of 597 Alibaba options with a strike price of $170 expiring on Oct. 15. The trade represented a $259,695 bullish bet for which the trader paid $4.35 per option contract.

The Bearish BABA Trades: Below is a look at the notable options alerts:

• At 9:45 a.m., a trader executed a put sweep at the ask of 360 Alibaba options with a strike price of $155 expiring on Oct. 15. The trade represented a $178,200 bearish bet for which the trader paid $4.95 per option contract.
• At 10:27 a.m., a trader executed a put sweep at the ask of 349 Alibaba options with a strike price of $155 expiring on Oct. 15. The trade represented a $174,500 bearish bet for which the trader paid $5 per option contract.
• At 10:32 a.m., a trader executed a put sweep at the ask of 1998 Alibaba options with a strike price of $155 expiring on Oct. 15. The trade represented a $1 million bearish bet for which the trader paid $5.05 per option contract.
• At 10:34 a.m., a trader executed a put sweep at the ask of 346 Alibaba options with a strike price of $175 expiring on Sept. 10. The trade represented a $178,200 bearish bet for which the trader paid $13.15 per option contract.
• At 10:35 a.m., a trader executed a put sweep at the ask of 1946 Alibaba options with a strike price of $175 expiring on Sept. 10. The trade represented a $2.55 million bearish bet for which the trader paid $13.30 per option contract.
• At 10:47 a.m., a trader executed a put sweep at the ask of 286 Alibaba options with a strike price of $175 expiring on Sept. 10. The trade represented a $396,110 bearish bet for which the trader paid $13.85 per option contract.
• At 11:28 a.m., a trader executed a put sweep at the ask of 593 Alibaba options with a strike price of $175 expiring on Sept. 10. The trade represented a $853,825 bearish bet for which the trader paid $14.35 per option contract.
• At 11:28 a.m., a trader executed a put sweep at the ask of 253 Alibaba options with a strike price of $175 expiring on Sept. 10. The trade represented a $363,055 bearish bet for which the trader paid $14.35 per option contract.
• At 11:30 a.m., a trader executed a put sweep at the ask of 201 Alibaba options with a strike price of $175 expiring on Sept. 10. The trade represented a $291,450 bearish bet for which the trader paid $14.50 per option contract.
• At 11:31 a.m., a trader executed a put sweep at the ask of 240 Alibaba options with a strike price of $175 expiring on Sept. 10. The trade represented a $352,800 bearish bet for which the trader paid $14.70 per option contract.

BABA Price Action: Alibaba was trading 3.31% to $159.92 late in Friday's session.