Bonawyn Eison Sees Unusual Options Activity In Alibaba

Bonawyn Eison spoke Wednesday afternoon on CNBC's "Options Action" about unusually high options activity in Alibaba Group Holding Ltd - ADR BABA. He said calls outpaced puts by about three times to one, but some of that was in spread action.

The options market is implying a 5% move in either direction between now and Friday expiry, said Eison. The average move over the last four quarters is 2.5%.

Get Started

Earn 7.2% — No Matter What the Fed Does

Markets expect rate cuts — but your earnings don’t have to suffer. Lock in 7.2% until 2028 from ten individual bonds.

Get Started

One trade caught Eison's attention. Around 13,000 contracts of the August 21, $260/$265 call spread were traded for $2. The trade breaks even at $262 or 0.5% above the closing price on Wednesday. If the stock jumps to $265 or higher after earnings, the trade would reach its maximal profit of $3.

On Thursday morning, Alibaba reported quarterly earnings of $2.10 per share, which beat the analyst consensus estimate of $1.99. The company reported quarterly sales of $21.76 billion, which beat the analyst consensus estimate of $21.34 billion.