#BABA SPOTLIGHT - Options insight on a high volume day

Traders and money managers enjoyed an abbreviated session Thursday leading into an extended holiday break. Unfortunately, Alibaba investors ended with shares lower by 13% on news of an investigation by Chinese regulators.

The daily volume of shares and options traded took the top of the charts.

As we examine the options data, both implied and historical volatility remain elevated relative to usual levels. Options traders exchanged over 1.6 million contracts on the underlying shares.

By the end of trading, the Feb 19 200 put contract traded as high as 1280 per contract, over 2x the previous day opening prices.

With earnings around the corner in February, it will be interesting to see how traders hedge and exactly how much they are willing to pay in order to do so as we head into the New Year.

Be sure to subscribe and receive the latest insights/options bits.

©2020 by Hisaab Capital.