Alibaba Group Holding Limited (BABA) is the ADR for Chinese e-commerce conglomerate Alibaba Group, the largest e-commerce company in the world. At the time of this post (12:30PM CST), BABA is currently trading at 100.37, down 2.49% on the day. The stock is currently trading near the middle of its post-IPO trading range of 82.81-120.00 after the stock debuted on the NYSE in late September. BABA is scheduled to report earnings tomorrow, 1/29/2015 before the market open.
Last quarter’s earnings report was the first and only on BABA’s record, so while the data is limited, it can be noted that the stock traded higher immediately after last quarter’s EPS, making a move up of 4.2% in the session immediately following the data release. The options market is currently pricing in a larger move of about 7.31% following tomorrow’s announcement, which would represent nearly an equivalent dollar-value move in the stock by this Friday’s weekly options expiration. BABA is currently trading just inside the Ichimoku cloud on a daily chart, and is holding above key 100 level support after initially trading lower in today’s early session. With some of the recent momentum we’ve seen in technology names after earnings, and after witnessing the bullish investor reaction to last quarter’s BABA EPS release, I will be looking to establish a long position in this name going into this afternoon’s close.
Potential Trade: Buying the BABA Jan 30th Weekly 104-106 Call Spreads for $0.55
Risk: $55 per 1 lot
Reward: $145 per 1 lot
Breakeven: $104.55