These Alibaba Options Traders See Upside Ahead

Alibaba Group Holdings Limited BABA announced on Monday it will back Vietnamese conglomerate Masan Group Corp. and has invested $400 million in its consumer retail arm.

Alibaba has been in desperate need of positive news after finding itself in the crosshairs of the Chinese government’s plans to enforce curbs on the e-commerce giant. Alibaba’s stock is trading down 32% from its all-time high of $319.32 it made on Oct. 27, 2020, and on May 14 began to reverse upwards.

A number of options traders believe the bottom is in for Alibaba’s stock and bet over $1.5 million the stock will trade higher.

See Also: How to Buy Alibaba Stock

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

• At 9:30 a.m., Tuesday a trader executed a call sweep, near the ask, of 1800 Alibaba options with a strike price of $245 expiring on June 18. The trade represented a $127,800 bullish bet for which the trader paid 71 cents per option contract.
• At 9:32 a.m., a trader executed a call sweep, near the ask, of 626 Alibaba options with a strike price of $215 expiring on May 21. The trade represented a $110,176 bullish bet for which the trader paid $1.76 per option contract.
• At 9:32 a.m., a trader executed a call sweep, near the ask, of 566 Alibaba options with a strike price of $215 expiring on May 21. The trade represented a $98,412 bullish bet for which the trader paid $1.77 per option contract.
• At 9:49 a.m., a trader executed a call sweep, near the ask, of 738 Alibaba options with a strike price of $240 expiring on June 18. The trade represented a $78,966 bullish bet for which the trader paid $1.07 per option contract.
• At 9:52 a.m., a trader executed a call sweep, near the ask, of 200 Alibaba options with a strike price of $215 expiring on Jan. 21. The trade represented a $485,000 bullish bet for which the trader paid $24.25 per option contract.
• At 10:00 a.m., a trader executed a call sweep, near the ask, of 365 Alibaba options with a strike price of $210 expiring on May 21. The trade represented a $171,550 bullish bet for which the trader paid $4.70 per option contract.
• At 10:24 a.m., a trader executed a call sweep, above the ask, of 200 Alibaba options with a strike price of $215 expiring on July 2. The trade represented a $176,800 bullish bet for which the trader paid $8.84 per option contract.
• At 10:30 a.m., a trader executed a call sweep, near the ask, of 204 Alibaba options with a strike price of $200 expiring on Jan. 21. The trade represented a $130,560 bullish bet for which the trader paid $6.40 per option contract.
• At 10:33 a.m., a trader executed a call sweep, at the ask, of 230 Alibaba options with a strike price of $210 expiring on May 21. The trade represented a $120,750 bullish bet for which the trader paid $5.25 per option contract.

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 option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call 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.

BABA Price Action: Shares of Alibaba were trading up 1% to $213.51 at publication time.