I've owned Alibaba twice...Did covered calls both times and it got called away. My wife doesn't want to pull the trigger again on it this time. She is very smart and a better investor than I am...Like buy and hold Lowe's and QQQ. If I had cash on the sidelines, I would buy BABA at about $225. I would then do a covered call for the Jan 22 at $230. and I would get over $39. for the call. If BABA is at $186. in Jan 22, I am still ahead of the game. They haven't sent Ant public yet. They are into everything. Jack is a member of The Communist Party...They will work something out. I see value here (I'm a value investor). Pay off some members, sell off some assets (to open up competition) and divest what you need to. Keep your mouth shut and make some money. BABA is a worldwide company. Do you see value here??
I like BABA, but would go with FXI instead. I've been moving more money into foreign stocks (EEM, INDA, FXI, etc) which I expect will outperform for a while. Wish I just bought and held EWY a few months ago...damn. Selling puts and covered calls was not the right strategy for that one.
That is a lot of cash to tie up for a year. Why not a diagonal, buy three of the Jan of 22 and start selling 2 contracts near term to pay them off and leave yourself the optionality of capturing the up move. (I have not analyzed the payoffs, just brainstorming.) Disclosure: I have been in BABA since $85 a share.
on a risk adjusted basis blindly selling baba options is not a good trade even if its a covered call. You can go look at realized vs implied.
If you would kindly indulge me with a newbie question. Based on the OP question, how much money would be made from that option trade if all goes according to plan? I only trade stocks because options sound like a foreign language to me and have been day trading BABA since the recent drop, although I'm now holding for a climb to 260 before selling again. I've made about 15k so far although I have 2000 shares still in the game. I guess I'm trying to figure out what the returns difference would be between day trading and options trading... thanks.
IMO, Jack Ma would be in jail if he wasn't such a popular public figure in China. China could make any company state-owned if they wanted to. Stock fell 15% in 1 day recently. Too much friction between China & U.S.. Ant is too important in the finance world and that bothers China. https://www.cnn.com/2021/01/06/tech/jack-ma-china-tech-intl-hnk/index.html
I got Ds in math...I have a BA and am smart, but see things differently. I was ADHD...Could recite a whole album and am good at Jeopardy, but math and art, good luck. I'll take a stab. Assume it will be one year...Annualized return. Bought 100 shares of BABA for $22,500. Sold it a year from now at $23,000...$500. profit. The option money is $3,900.+$500.=$4,400. $4,400 divided by $22,500.= 19.55% return on the money. If I took the $3,900. and put it into something earning 1% or so, I would get over a 20% return on the money. A LOT OF IFS THERE...
I’d only do this if my net liq was over a Millie, other than that there’s way better methods for deploying risk capital