New Options for Alibaba Group: Insights on Call and Put Contracts

Investors eyeing Alibaba Group Holding Ltd (Symbol: BABA) have new options available today, set to expire on April 25th. Stock Options Channel has analyzed the BABA options chain and has identified a notable put contract and a call contract.

Put Contract Opportunity

The put contract at the $138.00 strike price currently carries a bid of $6.00. Investors selling to open this put contract commit to purchasing shares of the Stock at $138.00, while also collecting the premium. This brings the effective cost basis of the shares down to $132.00 (before broker commissions). For those looking to buy BABA shares, this option offers an attractive alternative to the current market price of $140.68 per share.

This $138.00 strike price reflects a roughly 2% discount to the current trading price, indicating it is out-of-the-money by that percentage. Current analytics indicate a 64% chance that the put contract may expire worthless. Over time, Stock Options Channel will monitor these odds and provide updates on our website’s contract detail page. If the contract expires worthless, the premium would yield a 4.35% return on the cash commitment, translating to an annualized return of approximately 31.77%, a figure we refer to as the YieldBoost.

Call Contract Insights

On the call side, a contract at the $150.00 strike price currently has a bid of $7.90. Investors considering purchasing BABA shares at the currently traded price of $140.68 per share may opt to sell to open this covered call. Committing to sell the Stock at $150.00, while also collecting the premium, could provide a total return of 12.24%. This return assumes the Stock is called away at the April 25 expiration (excluding any dividends and broker commissions). Potential upside could be forfeited if BABA shares appreciate significantly, underscoring the importance of reviewing both historical trading patterns and the company’s fundamentals.

The $150.00 strike represents approximately a 7% premium to the current trading price, meaning it is also out-of-the-money by that percentage. There’s a 53% chance that this covered call may expire worthless, in which case the investor retains both the shares and the premium earned. Stock Options Channel will continue to track these odds over time and offer visual updates for users. If the covered call expires worthless, the premium would yield a 5.62% additional return, amounting to a 41.03% annualized return—another YieldBoost opportunity.

Volatility Considerations

The implied volatility for the put contract stands at 52%, while the call contract reflects 50% implied volatility. In contrast, our calculations show the actual trailing twelve-month volatility, factoring in the last 250 trading day closing values and today’s price of $140.68, to be 41%. For additional put and call options ideas, consider visiting StockOptionsChannel.com.

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Also see:

• Institutional Holders of CVE
• DUET shares outstanding history
• AHH Average Annual Return

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.