$Alibaba (BABA.US)$ investors and speculators are piling into call options that give the holders the right to buy its American depositary shares at $100 each after Tuesday’s rally took the ADSs to the highest in more than a year.
As of 12:16 p.m. in New York Tuesday, more than 98,500 call options with the $100 strike price changed hands across 19 expiration dates that stretch through Jan. 15, 2027, according to data tracked by moomoo. That’s more than a quarter of the 390,360 Alibaba put and call options traded so far. The total volume makes Alibaba the third most active options, behind $NVIDIA (NVDA.US)$ and $Tesla (TSLA.US)$ and puts the ADS ahead of $Apple (AAPL.US)$.
Alibaba shares jumped as Chinese stocks rallied after the Asian government announced measures to boost its domestic stock market. These included allowing institutional investors to access central bank financing to buy equities. Authorities are also considering setting up a market stabilization fund. The initiatives could unleash at least 800 billion yuan or more than $113 billion in initial liquidity support, according to a Bloomberg report.
The ADSs of the Chinese tech giant that operates e-commerce, cloud, digital media and entertainment advanced 6.9% to $96.34 around noon time in New York. That rally pushed the $100 Alibaba calls closer to being in-the-money.
The heaviest call options volume with that strike price are in calls expiring on Oct. 18, with 27,370 calls traded so far, more than double its open interest. The price of those $100 calls expiring in 24 days quadrupled.
Capital trend data showed inflows into Alibaba outpaced outflows by $99.5 million. That could help trim the fourth straight monthly net outflow from the stock.
Amid the rally, 10 of the 15 technical indicators tracked by moomoo are flashing warning signals that the stock could be overbought, and the trend could turn bearish.
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