BABA- Earnings this Tuesday November 04 (before the bell). Buy OTM calls Monday.

FXforex · Nov 2, 2014

What I like about this trade is that the markets are very bullish and a Chinese tech giant is about to report their first earnings since the IPO. The unknown factor is very high on a trade like this.

BABA at $98.60.
Price target after earnings $110.00+.
Buy BABA Nov7 107.00 call at $0.95 (exact strike and price to be determined).
Maximum risk $100.00.

Stay tuned for the update, my plan is to enter on Monday November 03 at 10:00 AM EST. Comments from the ET peanut gallery are welcome.

galvinlee888 · Nov 2, 2014

This time you might be right as there is no history for BABA move post earning announcement, so I will wait and see.

If I am you, I will go for cheap straddle.

FXforex · Nov 2, 2014

galvinlee888 said:
This time you might be right as there is no history for BABA move post earning announcement, so I will wait and see.

If I am you, I will go for cheap straddle.

I think you mean strangle. Cheapest straddle is about $7.20.

BABA Nov07 99C/99P straddle $3.50/$3.70 = $7.20
BABA Nov07 107C/92P strangle $0.95/$1.10 = $2.05

I don't like strangles or straddles because they are too expensive. Since I'm bullish on the overall market I prefer to buy calls only.

SmilinStorm · Nov 3, 2014

good luck, I'm still eyeing BABA.

galvinlee888 · Nov 3, 2014

FXforex said:
I think you mean strangle. Cheapest straddle is about $7.20.

BABA Nov07 99C/99P straddle $3.50/$3.70 = $7.20

BABA Nov07 107C/92P strangle $0.95/$1.10 = $2.05

I don't like strangles or straddles because they are too expensive. Since I'm bullish on the overall market I prefer to buy calls only.

My bad, i mean strangle

FXforex · Nov 3, 2014

UPDATE

BABA at $99.88
Bought 1 BABA Nov07 107.00 call at $1.20.
Price target after earnings $110.00+.
Maximum risk $120.00.

My plan is to close on Tuesday November 04.

donnap · Nov 3, 2014

A good purchase, so far. FWIW, the 108C could be sold for around 1.40 as I type. Credit + 100 max. value. Zero risk from entry.

I know, I know, you're shooting for another jackpot like the GOOG trade last year.

FXforex · Nov 3, 2014

donnap said:
A good purchase, so far. FWIW, the 108C could be sold for around 1.40 as I type. Credit + 100 max. value. Zero risk from entry.

I know, I know, you're shooting for another jackpot like the GOOG trade last year.

clickable link: "I like to avoid micro-managing a position, but I would consider selling half if it was up well over 100%"

TradeWarrior310 · Nov 3, 2014

Bought a weekly 95/107 strangle today at 1.30 and 1.32. Normally don't do these earnings gambles, but like the potential on this one. A few bucks on the line can't hurt.

donnap · Nov 3, 2014

FXforex said:
clickable link: "I like to avoid micro-managing a position, but I would consider selling half if it was up well over 100%"

Yeah, I thought that you wouldn't like that idea. Heck, I don't even like it. Not for a one lot. With bigger size, maybe sell off some call premium to reduce risk and trade at an advantage. Obviously, if BABA wasn't up today, I wouldn't even mention it.